Core Viewpoint - The Hong Kong Monetary Authority (HKMA) is adjusting its foreign exchange fund asset allocation, increasing the proportion of Hong Kong dollar assets while decreasing US dollar assets, in response to market volatility and the need for liquidity management [2][3][5]. Group 1: Asset Allocation Changes - As of the end of 2024, the total assets of the Hong Kong foreign exchange fund exceeded HKD 4.08 trillion, with US dollar assets amounting to approximately HKD 3.23 trillion, representing 79.1% of the total, a decrease of 3 percentage points from the end of 2023 [3]. - The proportion of Hong Kong dollar assets in the foreign exchange fund increased significantly, with a year-on-year rise of HKD 1,090.5 billion (72.12%), raising its share to 6.4% [3][4]. - The HKMA's strategy includes maintaining high liquidity and managing assets cautiously, with a focus on long-term value growth [6][8]. Group 2: Investment Strategy and Performance - The foreign exchange fund's assets are divided into four management categories: support portfolio, investment portfolio, long-term growth portfolio, and strategic asset portfolio, each serving different functions [6][7]. - As of the end of 2024, the support portfolio accounted for HKD 21,446 billion, while the long-term growth portfolio was HKD 5,412 billion, with total investment income reaching HKD 2,190 billion [7]. - The investment income from bonds was HKD 1,356 billion, while returns from Hong Kong stocks and other equities were HKD 218 billion and HKD 687 billion, respectively [7]. Group 3: Market Conditions and Future Outlook - The ongoing trade tensions and economic uncertainties are expected to impact the performance of the foreign exchange fund, with the HKMA emphasizing a cautious and flexible management approach [8]. - The HKMA's president has indicated that the fund will continue to prioritize capital preservation and long-term value, while also considering defensive measures in response to market volatility [8].