HKMA published the financial results of the Exchange Fund at the end of June 2019. The Exchange Fund recorded an investment income of HKD170.8 billion in the first half of 2019. The main components include gains on bonds of HKD76.4 billion, HK equities of HKD20.3 billion, other equities of 65.1 billion, negative currency translation effects on non-HK dollar assets of HKD3.5 billion, and gains on other investments of HKD12.5 billion.

Fees on placements by the Fiscal Reserves and placements by the HKSAR Government funds and statutory bodies were HKD15.3 billion and HKD4.5 billion respectively in the first half of 2019. After deducting all expenses and fees, the accumulated surplus of the Exchange Fund recorded an increase of HKD121.9 billion.

After deducting the investment income of HKD 133.4 billion in the first quarter, the income in the second quarter alone was only HKD 37.4 billion, down 72% year-on-year.

According to Norman Chan, Chief Executive of HKMA, the investment environment for the remaining half of they year is still fraught with uncertainties. While in the end of June China and the US agreed to resume trade negotiations, it cannot be assumed that an agreement would be reached any time soon. Furthermore, Brexit remains an important and unsettling factor. A hard Brexit could trigger volatilities throughout Europe’s economy and financial markets.