Core Insights - The Hong Kong Monetary Authority reported that as of January 31, 2026, the total assets of the foreign exchange fund reached HKD 42,856 billion, an increase of HKD 1,342 billion compared to the end of December 2025 [1] Group 1: Foreign Currency Assets - Foreign currency assets increased by HKD 1,070 billion, primarily due to the rise in the month-end balance of purchased but unsettled securities, interest income, and market revaluation of investments [1] - The increase in foreign currency assets was also supported by the issuance of liability certificates [1] Group 2: Hong Kong Dollar Assets - Hong Kong dollar assets rose by HKD 272 billion, mainly driven by an increase in bank deposits and the market revaluation of Hong Kong stocks [1] Group 3: Monetary Base - The monetary base as of the end of January 2026 was HKD 20,587 billion, reflecting a growth of HKD 187 billion, or 0.9%, compared to the end of December 2025 [1] - The growth in the monetary base was attributed to seasonal demand for banknotes during the Lunar New Year, leading to an increase in the total amount of liability certificates [1] Group 4: Supporting Assets - The total amount of supporting assets increased by HKD 289 billion to HKD 22,798 billion, representing a growth of 1.3% [1] - The rise in supporting assets was mainly due to the issuance of liability certificates, interest income from investments, and market revaluation of investments [1] - The supporting ratio improved from 110.34% at the end of December 2025 to 110.74% at the end of January 2026 [1]

Core Viewpoint - The Hong Kong Monetary Authority (HKMA) expresses confidence in maintaining the stability and soundness of Hong Kong's monetary and financial system while responding to the government's proposal to transfer investment income from the Exchange Fund [1] Group 1: Financial Stability - The HKMA emphasizes that the transfer of funds from the Exchange Fund to other government funds will not adversely affect its ability to maintain monetary and financial stability [1] - The Exchange Fund is required to ensure that its assets are at least 105% of its outstanding liabilities, as stipulated in Article 8 of the Exchange Fund Ordinance [1] Group 2: Budget Proposal - The Financial Secretary of Hong Kong proposes to transfer HKD 150 billion from the Exchange Fund to the government's Capital Works Reserve Fund to support the Northern Metropolis and other infrastructure projects [1] Group 3: Exchange Fund Performance - The Exchange Fund is projected to record over HKD 330 billion in investment income by 2025, and after the proposed transfer, its cumulative surplus is expected to increase to over HKD 780 billion compared to the end of 2024 [1] - The Exchange Fund holds over USD 420 billion in foreign exchange reserves, which is 1.6 times the monetary base, providing a solid foundation for the linked exchange rate system and financial system stability [1]

Core Insights - The Hong Kong Monetary Authority (HKMA) reported an increase in the foreign exchange fund's overseas assets by HKD 71.8 billion, reaching HKD 359.73 billion as of the end of January 2026 [1] - The monetary base is recorded at HKD 205.87 billion, which includes certificates of indebtedness, government-issued currency in circulation, bank system balances, and issued foreign exchange fund notes and bonds [1] - The total debt owed by the foreign exchange fund to the private sector in Hong Kong amounts to HKD 386.1 billion, while total external liabilities stand at HKD 63.9 billion [1]

Core Viewpoint - The Hong Kong Monetary Authority (HKMA) anticipates an increase in the bad debt ratio of the "100% Guaranteed Special Loans" to 18.67% by Q4 2025, reflecting a rise of 0.5-0.6 percentage points from Q3, with a slowdown in the growth rate compared to earlier increases of over 3 percentage points [1] Group 1: Bad Debt and Economic Indicators - The bad debt ratio for the "100% Guaranteed Special Loans" is projected to reach 18.67% by Q4 2025, indicating a slight increase from the previous quarter [1] - The growth rate of the bad debt ratio has slowed down, with earlier increases exceeding 3 percentage points [1] Group 2: Investment Strategy and Market Conditions - The HKMA's Vice President, Li Dachih, noted that the foreign exchange fund holds a small amount of physical gold, with limited exposure to gold-related investments despite strong price increases over the past two years [1] - Li highlighted the need for risk diversification in the foreign exchange fund due to various market uncertainties, including geopolitical factors and the direction of U.S. interest rates [1] - Precious metals are considered to have investment value, but their price fluctuations differ from those of bonds [1] Group 3: Fund Management and Returns - HKMA President, Yu Weiman, stated that the foreign exchange fund's investment strategy is effective, using a rolling 6-year investment return rate or a 3-year foreign exchange fund note yield as benchmarks to ensure more predictable and stable government investment returns [1]

Core Viewpoint - The Hong Kong Monetary Authority reported an increase in total assets of the foreign exchange fund, reaching HKD 4,151.4 billion by December 31, 2025, reflecting a rise of HKD 44.4 billion from the end of November 2025 [1] Group 1: Foreign Exchange Fund Assets - Total assets of the foreign exchange fund increased by HKD 44.4 billion, with HKD 23.7 billion attributed to Hong Kong dollar assets and HKD 20.7 billion to foreign currency assets [1] - The increase in Hong Kong dollar assets was primarily due to a rise in bank deposits [1] - The growth in foreign currency assets was driven by an increase in currency swap agreements, interest income, and market value revaluation of investments, although partially offset by a decrease in the month-end balance of purchased but unsettled securities [1] Group 2: Monetary Base and Support Assets - The monetary base as of December 31, 2025, was HKD 2,040 billion, reflecting an increase of HKD 7.8 billion, or 0.4%, from November 2025 [1] - The growth in the monetary base was mainly due to the increase in the market value of outstanding foreign exchange fund notes and bonds, as well as a rise in the total amount of liability certificates [1] - Total support assets increased by HKD 9.6 billion to HKD 225.09 billion, also showing a growth of 0.4%, primarily due to interest income from investments and the issuance of liability certificates, although this increase was partially offset by market value revaluation of investments [1] - The support ratio improved from 110.29% at the end of November 2025 to 110.34% at the end of December 2025 [1]

Core Insights - The Hong Kong Monetary Authority (HKMA) reported a record investment income of HKD 331 billion for the foreign exchange fund in 2025, marking the highest in its history [1][2]. Investment Performance - The foreign exchange fund achieved an investment return rate of 8%, with key components including bond investment income of HKD 142.2 billion, Hong Kong stock investment income of HKD 33.9 billion, and other stock investment income of HKD 74.1 billion [2]. - The total assets of the foreign exchange fund increased by HKD 70.4 billion, rising from HKD 4,081 billion at the end of 2024 to HKD 4,151.4 billion at the end of 2025 [2]. Market Conditions - The HKMA noted significant market volatility in the first half of 2025 due to trade tensions and geopolitical issues, but the investment environment improved in the second half, aided by a reduction in policy interest rates by major central banks [7][8]. - The Hang Seng Index saw a 28% increase over the year, benefiting from capital inflows, while the US dollar depreciated by approximately 9% against other major currencies [7][8]. Future Outlook - The HKMA's president emphasized that the favorable conditions seen in 2025 may not persist, with potential impacts from global economic conditions, central bank policies, and geopolitical conflicts on financial market performance in 2026 [8]. - The HKMA will continue to manage the foreign exchange fund with a focus on capital preservation and long-term value growth, maintaining high liquidity and promoting investment diversification [8].

Core Insights - The Hong Kong Monetary Authority (HKMA) reported a record investment income of HKD 331 billion for the foreign exchange fund for the year ending December 2025, marking the highest in its history [1][2] Investment Performance - The foreign exchange fund achieved an investment return rate of 8%, with a portfolio return rate of 12.4% and a support portfolio return rate of 5.2% [2] - The total assets of the foreign exchange fund increased by HKD 70.4 billion, rising from HKD 4,081 billion at the end of 2024 to HKD 4,151.4 billion at the end of 2025 [2] - Cumulative surplus of the foreign exchange fund reached HKD 936.1 billion by the end of 2025 [2] Income Composition - The main components of the investment income included: - Bond investment income: HKD 142.2 billion - Hong Kong stock investment income: HKD 33.9 billion - Other stock investment income: HKD 74.1 billion - Foreign exchange valuation adjustments on non-HKD assets: HKD 38.4 billion - Other investment income: HKD 42.4 billion [2] Market Conditions - The HKMA President noted significant market volatility in the first half of 2025 due to trade tensions and geopolitical issues, but conditions improved in the second half with a rebound in major stock markets and a decline in policy interest rates by major central banks [6][7] - The Hang Seng Index saw a 28% increase over the year, benefiting from capital inflows [6] Future Outlook - The HKMA President cautioned that the favorable conditions seen in 2025 may not persist into 2026, as global economic conditions, central bank policies, AI developments, and geopolitical conflicts could impact market performance [7] - The HKMA will continue to manage the foreign exchange fund with a focus on capital preservation and long-term value enhancement, maintaining high liquidity and promoting investment diversification [7]

Group 1 - The Hong Kong Monetary Authority reported that the foreign exchange fund achieved a record investment income of HKD 331 billion in 2025, the highest in history [1] - The main components of the investment income include: bond investment income of HKD 142.2 billion; Hong Kong stock investment income of HKD 33.9 billion; other stock investment income of HKD 74.1 billion; foreign exchange valuation adjustments of non-HKD assets amounting to HKD 38.4 billion; and other investment income of HKD 42.4 billion [1] - The investment return rate for the foreign exchange fund in 2025 was 8.0%, with a portfolio return rate of 12.4% and a supporting portfolio return rate of 5.2% [1] Group 2 - The total assets of the foreign exchange fund increased by HKD 70.4 billion, rising from HKD 4,081 billion at the end of 2024 to HKD 4,151.4 billion at the end of 2025 [1] - The cumulative surplus of the foreign exchange fund reached HKD 936.1 billion by the end of December 2025 [1] - The President of the Monetary Authority noted that global financial markets performed robustly in 2025, with major stock markets generally rising and reaching record highs, including a 16% increase in the S&P 500 and a 28% increase in the Hang Seng Index [1] Group 3 - Looking ahead to 2026, factors such as global economic conditions, major central bank monetary policies, the development of artificial intelligence, and geopolitical issues may impact financial market performance [2] - The Monetary Authority plans to make appropriate defensive deployments and maintain high liquidity in response to a complex and changing investment environment, aiming to diversify investments and enhance long-term investment returns [2]

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 Hong Kong Monetary Authority (HKMA) reported a record investment income of HKD 331 billion for the foreign exchange fund in 2025, driven by various asset classes including bonds and equities [1][2] - The total assets of the foreign exchange fund increased by HKD 70.4 billion from HKD 4,081 billion at the end of 2024 to HKD 4,151.4 billion at the end of 2025 [1] - The investment return rate for the foreign exchange fund was 8.0% in 2025, with a notable 12.4% return from the investment portfolio [1] Financial Performance - The foreign exchange fund's investment income components included: - Bond investment income: HKD 142.2 billion - Hong Kong stock investment income: HKD 33.9 billion - Other stock investment income: HKD 74.1 billion - Foreign currency valuation adjustments: HKD 38.4 billion - Other investment income: HKD 42.4 billion [1] - The fund's cumulative surplus reached HKD 936.1 billion by December 2025 [1] Market Commentary - HKMA's CEO noted that the global financial markets experienced significant volatility in the first half of 2025 due to trade tensions and geopolitical issues, but improved in the second half due to reduced trade friction and advancements in AI technology [2] - Major stock markets, including the S&P 500 and the Hang Seng Index, saw substantial gains of 16% and 28% respectively in 2025 [2] - The depreciation of the US dollar against other major currencies by approximately 9% contributed positively to the foreign exchange fund's non-HKD assets [2] Strategic Outlook - The HKMA plans to maintain a cautious and flexible management approach for the foreign exchange fund, focusing on capital preservation and long-term growth [3] - The authority will implement defensive strategies and maintain high liquidity while diversifying investments to enhance long-term returns [3]