HKMA's Exchange Fund Posts HK$194.4 Billion H1 2025 Investment Income Amid Market Volatility
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The Hong Kong Monetary Authority (HKMA) reported that the Exchange Fund achieved an unaudited investment income of HK$194.4 billion in the first half of 2025, supported by gains across bonds, equities, and foreign currency holdings despite turbulent global market conditions.
Key Investment Results
The first half's investment income was driven by:
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Bonds: HK$75.3 billion in gains
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Hong Kong equities: HK$22.9 billion in gains
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Other equities: HK$27.4 billion in gains
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Positive currency translation effect: HK$56.8 billion on non-Hong Kong dollar assets
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Other investments: HK$12.0 billion in gains
Fees on placements by the Fiscal Reserves reached HK$8.5 billion, while HKSAR government funds and statutory bodies contributed HK$8.3 billion. The fee payment rate for 2025 was set at 4.4%.
As of 30 June 2025, the Exchange Fund's total assets stood at HK$4,297.1 billion, an increase of HK$216.1 billion from the end of 2024. Accumulated surplus reached HK$877.9 billion.
Market Volatility and Recovery
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HKMA Chief Executive Eddie Yue noted that the first half of 2025 was marked by sharp market swings. In early April, aggressive US tariff measures triggered global sell-offs, driving the S&P 500 down 12% within days, and the 10-year US Treasury yield surged 50 basis points to around 4.5%, the steepest weekly rise since 2020.
As tariff negotiations progressed, investor confidence returned, leading to a rebound in global and Hong Kong equities, with the Hang Seng Index rising 20% in the first half. US bonds also performed well, as yields remained elevated and generated strong interest income for the Exchange Fund's bond portfolio. Additionally, the US dollar's depreciation against major currencies boosted the Fund’s foreign currency translation gains.
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Yue cautioned that the investment landscape in the second half of 2025 remains highly uncertain, highlighting several risk factors:
Potential escalation of US trade frictions and geopolitical tensions
Volatility in global capital flows and corporate earnings
Uncertainty over the US Fed's policy path and US government debt servicing concerns
The possibility of reversals in foreign currency translation gains
He reiterated that the HKMA would maintain a capital preservation-first principle, supported by:
Prudent and flexible fund management
High liquidity levels and defensive measures
Continued diversification to seek sustainable long-term returns
Yue concluded that these strategies are essential for ensuring the Exchange Fund continues to safeguard Hong Kong's monetary and financial stability.
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