Core Viewpoint - The Hong Kong Monetary Authority (HKMA) is focused on diversifying its foreign exchange fund investments, with an emphasis on long-term returns, including a modest allocation to gold [1] Group 1: Foreign Exchange Fund Diversification - The HKMA president, Eddie Yue, indicated that the foreign exchange fund aims for diversified investments and has a small allocation to gold [1] - Historically, the foreign exchange fund had a high allocation of 85-86% in US dollar assets, which is projected to decrease to 79% by the end of 2024, leaving 21% in non-US dollar assets [1] Group 2: Issuance of Foreign Exchange Fund Notes - The CEO of the HKMA's Foreign Exchange Fund Investment Office, Li Dak-chi, stated that the decision to issue additional foreign exchange fund notes depends on monetary management factors, such as Hong Kong interbank rates and the yield of the foreign exchange fund [1] - The issuance of foreign exchange fund notes is not considered an investment action [1] Group 3: Long-Term Growth Portfolio Performance - Since 2009, the HKMA has been investing in alternative assets through a "Long-Term Growth Portfolio," which has shown stable performance in the first three quarters of 2025 [1] - The annualized internal rate of return for the portfolio from inception until September 2025 is reported at 11.2% [1] - As of September 2025, the total market value of the main asset categories in the portfolio is HKD 579.6 billion, with private equity valued at HKD 420.4 billion and physical assets at HKD 159.2 billion [1]

Core Insights - The social security fund has newly invested in 19 stocks in the second quarter, focusing on high-performing sectors such as biomedicine, computers, and electronics, which are aligned with national strategic priorities and economic transformation [1][5] Investment Trends - As of the end of the second quarter, the social security fund held 77 stocks in the Sci-Tech Innovation Board, with a total holding of 337 million shares valued at 15.37 billion yuan, having newly entered 19 stocks and increased holdings in 28 stocks [1][2] - The fund's investment style is characterized by a cautious approach, emphasizing value investment and long-term returns, with a notable increase in allocations to technology innovation companies [1][2] Sector Focus - The fund's holdings are primarily concentrated in four sectors: electronics (20 companies), biomedicine (13 companies), machinery (10 companies), and computers (11 companies) [1] - In terms of stock count, the fund's top holdings include 7 stocks with over 10 million shares, with Transsion Holdings (382.64 million shares) leading, followed by Western Superconducting (205.81 million shares) [2] Performance Metrics - The newly added 19 stocks showed median year-on-year growth rates of 25.7% in revenue and 28.14% in net profit, significantly outperforming the overall market [6] - The fund's focus on biomedicine is evident, with 4 new investments in this sector, alongside 2 each in electronics, military, communications, and computers [6] Notable Stock Movements - The fund increased its holdings in several key stocks, including a significant increase of 6.37 million shares in Transsion Holdings, marking the largest single stock increase for the quarter [3][4] - Other notable increases include 5 stocks in the biomedicine sector and 4 in the computer sector, with specific increases exceeding 1 million shares [4][5] Reduction in Holdings - In the second quarter, 38 stocks on the Sci-Tech Innovation Board were reduced in holdings by the social security fund, with 24 of these seeing reductions of over 1 million shares [8] - Some stocks that were reduced have since experienced significant price increases, indicating a potential misalignment in the fund's timing of trades [8]