Exchange Fund Posts HK$18.6B Q3 Investment Income Amid Bond Slump
RTHK · 4 SOURCESabout 6 hours ago2 MIN
Summary
The Hong Kong Monetary Authority disclosed on Friday that the Exchange Fund secured HK$18.6 billion in investment income during the third quarter of 2026, reflecting a significant 70 percent year-on-year decrease. While all investment categories posted positive returns for the quarter, bond income collapsed to just HK$300 million, plummeting approximately 99 percent compared with both the same period last year and the preceding quarter. Hong Kong-listed equities delivered HK$9.1 billion in investment income, recovering from a loss in the second quarter, though this still represented a 47 percent decline year-on-year. The fund's cumulative performance for the first nine months of 2026 reached HK$171.9 billion in investment income, with only Hong Kong equities recording a loss of HK$2.7 billion over that period.
Key Points
- Exchange Fund Q3 2026 investment income totaled HK$18.6 billion, down 70 percent from the same quarter in 2025
- Bond investments yielded only HK$300 million in Q3, marking a near 99 percent decline year-on-year and quarter-on-quarter
- Hong Kong equities contributed HK$9.1 billion in Q3 income, reversing from a loss in Q2 but falling 47 percent compared with Q3 2025
- Other equity investments generated HK$1.5 billion, while foreign exchange gains reached HK$7.7 billion
- Cumulative nine-month investment income reached HK$171.9 billion, with bonds contributing HK$49.4 billion and other stocks HK$55.2 billion
- Hong Kong stocks incurred a loss of HK$2.7 billion for the first three quarters, the only asset class to post negative returns
- HKMA Deputy Chief Executive Li Dazhi advised investors to focus on the Exchange Fund's long-term returns rather than short-term quarterly fluctuations
Why It Matters
The sharp contraction in bond income despite otherwise positive quarterly returns highlights the volatility facing the Exchange Fund amid shifting interest rate expectations, with implications for Hong Kong's fiscal reserves and the government's ability to maintain the linked exchange rate system. The fund's strong cumulative performance of HK$171.9 billion over nine months provides a buffer, but the deteriorating bond contribution warrants monitoring as global monetary policy continues to evolve .
The sharp contraction in bond income despite otherwise positive quarterly returns highlights the volatility facing the Exchange Fund amid shifting interest rate expectations, with implications for Hong Kong's fiscal reserves and the government's ability to maintain the linked exchange rate system. The fund's strong cumulative performance of HK$171.9 billion over nine months provides a buffer, but the deteriorating bond contribution warrants monitoring as global monetary policy continues to evolve .