The foreign exchange fund's investment income in 2025 reached HKD 331 billion, setting a new historical high. Richard Yu: Last year was very special and may not be sustainable

The foreign exchange fund has released its performance report for the past year, recording an investment income of HKD 331 billion. Even excluding the income from other investment projects not yet accounted for in the last quarter, this represents a year-on-year increase of 51.3%, breaking historical records, with an investment return rate of 8%, which is 2.8 percentage points higher than last year. The Chief Executive of the Hong Kong Monetary Authority, Richard Yu, admitted that last year's performance of the foreign exchange fund was very special and may not be sustainable this year, but they will adhere to the investment principle of capital preservation first and long-term value growth. Fourth Quarter Profit of HKD 46.2 Billion The outstanding performance of the foreign exchange fund last year was attributed to positive returns across various asset classes. Bond investments earned HKD 142.2 billion, a year-on-year increase of 4.6%; Hong Kong stocks gained 55.5% to HKD 33.9 billion, while other stocks increased by 7.2% to HKD 74.1 billion; foreign exchange investments turned from loss to profit, earning HKD 38.4 billion. Additionally, as of the end of September last year, other investments recorded a profit of HKD 42.4 billion. In the fourth quarter alone, the foreign exchange fund earned HKD 46.2 billion, turning losses into profits year-on-year. During the quarter, bond investments recorded a profit of HKD 29.6 billion, a year-on-year increase of 1.6 times; Hong Kong stock investments lost HKD 6.2 billion, with losses narrowing year-on-year; other stocks earned HKD 14.6 billion, a year-on-year surge of 3.7 times; foreign exchange turned from loss to profit, earning HKD 8.2 billion year-on-year. Total Assets of the Foreign Exchange Fund Increased to HKD 41.5 Trillion The Hong Kong Monetary Authority stated that last year, the interest rate paid by the foreign exchange fund to the fiscal reserve deposits and deposits from the Hong Kong government funds and statutory organizations was 4.4%, with related expenses for 2025 being HKD 16.5 billion and HKD 14.7 billion, respectively. The summary of the foreign exchange fund's balance sheet shows that total assets increased by HKD 70.4 billion, rising from HKD 4.081 trillion at the end of 2024 to HKD 4.1514 trillion at the end of 2025. By the end of December 2025, the cumulative surplus of the foreign exchange fund was HKD 936.1 billion. The investment return rate of the foreign exchange fund for 2025 is 8%, with the "investment portfolio" return rate at 12.4% and the "support portfolio" at 5.2%. The annualized internal rate of return for the "long-term growth portfolio," which began investing in 2009, was 11.2% as of the end of September 2025. Weakening US Dollar Leads to Foreign Exchange Valuation Adjustment Richard Yu commented on the performance of the foreign exchange fund in 2025, stating that the global financial market experienced significant fluctuations in the first half of 2025 due to trade frictions and geopolitical situations, especially after the US government announced a series of aggressive tariff measures in early April, which caused global stock and bond markets to plummet sharply. Entering the second half of the year, as the impact of trade frictions was less than expected, coupled with rapid developments in artificial intelligence technology driving capital investment, the investment environment significantly improved. Additionally, major central banks lowered policy interest rates during the year, which also helped enhance market sentiment. Overall, the global financial market performed robustly, with major stock markets generally rising and reaching record highs during the year, including a 16% increase in the S&P 500 index; the Hong Kong stock market benefited from capital inflows, with the Hang Seng Index rising 28% for the year. US Treasury bonds also performed well throughout the year in the context of the Federal Reserve's interest rate cuts In the foreign exchange market, the US dollar depreciated by about 9% against other major currencies. Against this backdrop, the foreign exchange fund recorded its highest investment income in history in 2025, with positive returns from its stocks, bonds, and "long-term growth portfolio." The weakening of the US dollar also led to an upward adjustment in the foreign exchange valuation of the fund's non-HKD assets. Last year was very special and may not be sustainable in the long term It is very unusual for all major components of the foreign exchange fund to record positive returns simultaneously, having only occurred in 2017 and 2020 over the past 15 years. The investments of the foreign exchange fund also involve costs and expenditures, such as payments to fiscal reserve deposits, government funds, and statutory organization deposits, as well as interest on foreign exchange fund notes and bonds and other expenses. Richard Yu stated that the special circumstances of multiple favorable factors in the global market in 2025 may not be sustainable in the long term. Looking ahead to 2026, factors such as global economic conditions, monetary policies of major central banks, the development of artificial intelligence, and geopolitical conflicts may all impact the performance of financial markets. If conditions worsen, significant fluctuations in financial markets may occur. In the face of a complex and changing investment environment, the Hong Kong Monetary Authority will continue to adhere to the principle of "capital preservation first, long-term value appreciation," managing the foreign exchange fund cautiously and flexibly. Appropriate defensive measures will be taken, maintaining high liquidity, and continuing to diversify investments to enhance the long-term investment returns of the foreign exchange fund, ensuring that it can effectively maintain Hong Kong's monetary and financial stability