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Hong Kong Exchange Fund to Boost Investments in Emerging Markets

Hong Kong’s Exchange Fund will boost investments in emerging-market securities and yuan-denominated assets after posting its second-highest annual investment income on record.

The fund’s 4.4 percent return on investments last year brought income of HK$108.6 billion ($14 billion), Hong Kong Monetary Authority Chief Executive Norman Chan said at a briefing in the city yesterday. That compared with a 1.1 percent gain in 2011 and the 5.6 percent annual average return since 1994, according to a statement by the HKMA.

“The board has agreed to transfer emerging-market bonds and equities and renminbi assets into the investment portfolio as liquidity improves,” Chan said. “Global financial markets will continue to be subject to many uncertainties in 2013.”

The HKMA will discuss raising its quota in the Qualified Foreign Institutional Investor Program with Chinese authorities, Chan said. The HKMA has a quota of $1 billion in the QFII program, which allows foreign investors to trade in China’s onshore equity and bond markets.

Among its assets last year, the Exchange Fund had HK$47 billion in yuan-denominated assets, HK$47 billion in private equity, HK$41 billion in emerging-market bonds and equities, and HK$14 billion in real estate, Chan said.

To contact the reporter on this story: Fion Li in Hong Kong at fli59@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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