Core Viewpoint - The Hong Kong Monetary Authority (HKMA) reported a strong performance of the Exchange Fund in the first half of 2025, with significant investment income despite a volatile global financial market influenced by trade tensions and geopolitical issues [1][2]. Group 1: Financial Performance - The Exchange Fund recorded an investment income of HKD 194.4 billion in the first half of 2025, with key components including bond investment income of HKD 75.3 billion, Hong Kong stock investment income of HKD 22.9 billion, and other stock investment income of HKD 27.4 billion [1]. - The total assets of the Exchange Fund reached HKD 4,297.1 billion by the end of June 2025, an increase of HKD 216.1 billion from the end of 2024, with cumulative surplus amounting to HKD 877.9 billion [1]. Group 2: Market Conditions - The global financial market experienced significant volatility due to rising trade barriers and geopolitical tensions, particularly after the U.S. government announced aggressive tariff measures in early April 2025, leading to a sharp decline in stock and bond markets [1]. - The S&P 500 index saw a decline of approximately 12% within a few days starting April 3, 2025, while the yield on 10-year U.S. Treasury bonds rose by 50 basis points to about 4.5% in a single week, marking the largest weekly change since the COVID-19 crisis in 2020 [1]. Group 3: Future Outlook - Despite the positive investment returns in the first half of 2025, the investment environment for the second half remains uncertain, with unpredictable U.S. trade policies potentially impacting international capital flows and corporate profitability [2]. - The HKMA plans to maintain a cautious and flexible management approach for the Exchange Fund, focusing on capital preservation and long-term value growth while ensuring high liquidity and diversified investments [3].