Hong Kong’s Mandatory Provident Fund (MPF) has suffered a significant blow, with assets losing approximately $43.4 billion (HK$43.4 billion) in value as global markets continue to feel the impact of the ongoing trade war, particularly the effects of U.S. tariffs. According to MPF Ratings, the fund’s investments saw a 3.24 percent decline between April 1 and 22, resulting in an average loss of HK$9,100 per member.
This sharp downturn has raised concerns about the overall performance of the MPF for the year. If markets remain stagnant for the rest of the month, the fund’s year-to-date return could end up at a loss of 0.64 percent, marking the first negative return of the year and the worst performance for the first four months since 2022. This would result in a cumulative loss of around HK$8.6 billion, or HK$1,800 per member.
The trade war has been particularly harsh on equity funds, with all categories posting losses. Hong Kong and China equity funds have taken the biggest hit, with a 7.1 percent drop in April alone, making it the worst-performing MPF asset class for the month. However, these funds are still the second-best performers year-to-date, thanks to a strong start earlier this year.
U.S. equity funds, part of the MPF scheme, have also struggled. The asset class has fallen by about 5.94 percent in April, marking its third consecutive monthly decline—the first such streak since October 2023. This puts U.S. equity funds down approximately 10.89 percent for the year, representing the second-worst performance in the first four months since the MPF system’s inception in 2000.
The steep losses highlight the broader economic challenges stemming from the ongoing trade tensions between the U.S. and China, which have created significant volatility in global markets. Investors in Hong Kong’s MPF system are now facing uncertainty, as the market outlook remains unpredictable with no clear resolution in sight for the trade war. The sustained declines in both Hong Kong and U.S. equity markets underscore the global ripple effect of the trade conflict and its continued impact on retirement savings for millions of MPF members.