CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. Yam Pleased With Exchange Fund Investment Performance

Yam Pleased With Exchange Fund Investment Performance

by Mary Swire,, Hong Kong

13 November 2006

Hong Kong Monetary Authority Chief Executive, Joseph Yam announced on Thursday that he is optimistic about the Exchange Fund's investment performance this year, but that it may be affected by a number of factors.

The Exchange Fund's investment income amounted to HK$67.8 billion by September, HK$30 billion more than in all of 2005. The Government's share of investment income was HK$19 billion, higher than the original forecast of HK$18.2 billion.

In his latest Viewpoint article, Mr Yam stated that the true and fair measurement of investment performance is the differential between the rate of investment return and the rate of return of the benchmark portfolio, or the "alpha".

He explained:

"We deviate from the benchmark portfolio in asset allocation, hoping to achieve better results than sticking to the benchmark allocation, meaning essentially doing nothing. If we are successful, the alpha will be positive. If not, it will be negative."

"Since benchmarking was introduced, the alpha has been positive in every year except 2004 when it was zero, meaning that our investment performance has been good. With two months to go, we are optimistic about achieving a positive alpha this year, but the world is an uncertain place and we cannot give any guarantee."

He went on to add that a number of factors can affect the Exchange Fund's investment performance. Sharp, adverse adjustments in global financial markets are always a possibility, particularly when issues of global significance continue to affect financial stability.

The US trade imbalance remains, as does the common view that it cannot be sustained indefinitely. Geopolitical tension has been building in some places, notably in this region, he observed.

Mr Yam went on to state that macro adjustment and control on the Mainland is still going on, and the effects of administrative measures for macro-economic control are difficult to predict because of the distortions to resource allocation they entail.

But he suggested that the global economy seems to be robust, although greater concern now about inflation may lead to more monetary tightening.

"We will continue to do our best to make investment decisions in the best interests of the Exchange Fund in accordance with the guidance given by the Exchange Fund Advisory Committee," he wrote, continuing:

"But I must confess to having something of a conservative bias, at least as far as the money managed in-house by the authority is concerned, because we would like to keep what we have already made in the first nine months, in the hope that by the end of the year our performance really will meet the expectation of the Financial Secretary and the community."

To see today's news, click here.


Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »

Stay Updated

Please enter your email address to join the mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.

To manage your mailing list preferences, please click here »