The Monetary Provident Fund (MPF), Hong Kong’s compulsory pension scheme, is expected to see a 4.02% gain in May, adding an estimated HK$41 billion in investment earnings to its average account balances. The gains were led by Hong Kong and mainland China equities.

In absolute dollar terms, a 4.02% gain would be equivalent to an approximate investment gain of HK$40.8 billion (US$5.22 billion), or HK$8,600 for each of the MPF’s 4.75 million members, contributing to a year-to-date investment gain of HK$66.4 billion or HK$14,000 per member, according to independent research provider MPF Ratings.

All asset classes reported positive returns in May. Hong Kong and China equities’ estimated 7.59% return is expected to top MPF’s May performance table for a second consecutive month and post a fourth straight monthly gain this year.

“MPF members have shifted a record HK$9.2 billion into US equities this year while withdrawing HK$3.1 billion from Hong Kong and China share markets,” says MPF Ratings chairman Francis Chung. “This lack of confidence in local equities contradicts the fact that local shares have now produced four consecutive months of positive performance and is currently also on track to deliver its fourth best first five calendar months’ performance since MPF’s inception.”

MPF Ratings expects average account balances to exceed the psychologically critical HK$250,000 level for the first time since January 2022. “In our experience, HK$250,000 is the level where MPF members start believing they have a solid pillar for retirement planning,” Chung notes.

Despite the continued market volatility, Chung believes that investment sentiment is turning positive. “While inflation globally remains stubborn and interest rates remain elevated, solid corporate results are underpinning investor confidence,” he adds.