HKMA Reports HK$194.4 Billion Investment Income for Exchange Fund in First Half of 2025

Exchange Fund Position at end-June 2025

The following is issued on behalf of the Hong Kong Monetary Authority:

The Hong Kong Monetary Authority (HKMA) today (July 31) published the unaudited financial position of the Exchange Fund at end-June 2025.

The Exchange Fund recorded an investment income of HK$194.4 billion in the first half of 2025. The main components were:

gains on bonds of HK$75.3 billion;

gains on Hong Kong equities of HK$22.9 billion;

gains on other equities of HK$27.4 billion;

positive currency translation effect of HK$56.8 billion on non-Hong Kong dollar assets (Note 1); and

gains on other investments of HK$12.0 billion (Note 2).

Fees on placements by the Fiscal Reserves and placements by Hong Kong Special Administrative Region Government funds and statutory bodies were HK$8.5 billion (Note 3) and HK$8.3 billion respectively in the first half of 2025, with the rate of fee payment at 4.4per cent for 2025.

Total assets of the Exchange Fund stood at HK$4,297.1 billion at end-June 2025, an increase of HK$216.1 billion from the end of 2024. Accumulated surplus stood at HK$877.9 billion at end-June 2025.

The Chief Executive of the HKMA, Mr Eddie Yue,said, "The global financial markets experienced significant volatility in the first half of 2025 due to escalating trade barriers and frictions, as well as intensifying geopolitical tensions in the Middle East. In particular, following the announcement of a series of aggressive tariff measures by the US Government in early April, the global financial markets underwent massive sell-offs, with the equity and bond markets experiencing sharp declines. The S&P 500 fell by roughly 12per cent over a few days since April 3. The 10-year US Treasury yield also surged by 50 basis points to around 4.5per cent within a week in April, registering the sharpest weekly change since the pandemic outbreak in 2020.

As the US and major economies made progress in tariff negotiations, investor confidence stabilised and global equity markets rebounded. The Hong Kong equities also benefitted from capital inflows and the Hang Seng Index rose by about 20per cent in the first half. As for the bond market, the US Fed kept its monetary policy target unchanged in the first half of the year. Hence, US bond yields stayed at relatively high levels, generating good interest income for the Exchange Fund's bond portfolio.

Against this backdrop, the Exchange Fund recorded a decent investment income in the first half of 2025, with positive returns across major asset classes of bonds, equities and alternative investments. The weakening of the US dollar against major currencies in the first half also resulted in significant positive currency translation effect on the Exchange Fund's assets."

He added, "While the Exchange Fund achieved good returns in the first half of the year, the investment landscape in the second half remains highly uncertain. The uncertainty of US Government's economic and trade policies will affect international capital flows, as well as corporates' earnings and investment decisions. Any increase in trade frictions or deterioration in geopolitical situations may cause a slowdown in global economic growth, and may also trigger a sharp reversal of market optimism, bringing shocks to the financial markets. In addition, the pace of adjustments of the Fed's monetary policy and concerns over the US Government's debt servicing ability may also affect the performance of US dollar assets and the US dollar against other currencies. While a sizeable part of the Exchange Fund's investment income in the first half was from the positive foreign currency translation effect, these valuation changes are subject to fluctuations and may not be sustained in the second half of the year.

In the face of the complex and volatile investment environment, the HKMA will continue to adhere to the principle of capital preservation first while maintaining long-term growth. We will continue to manage the Exchange Fund with prudence and flexibility, implement appropriate defensive measures, and maintain a high degree of liquidity. We will also continue our investment diversification to strive for higher long-term returns, and ensure that the Exchange Fund remains effective in achieving its purpose of maintaining monetary and financial stability of Hong Kong."

Note 1: This is primarily the effect of translating foreign currency assets into Hong Kong dollar after deducting the portion for currency hedging.

Note 2: This is the valuation change of investments held by investment holding subsidiaries of the Exchange Fund. This figure reflects the valuations at the end of March 2025. Valuation changes of these investments from April to June are not yet available.

Note 3: This does not include the 2025 fee payment to the Future Fund because such amount will only be disclosed when the composite rate for 2025 is available.

Source: AI-found images

Hong Kong Customs detects two dangerous drugs cases and seizes suspected drugs worth about $7.95 million

Hong Kong Customs detected two dangerous drugs cases in Tseung Kwan O and Hong Kong International Airport respectively yesterday (May 21) and today (May 22), and seized a total of about 21.8 kilograms of assorted drugs with a total estimated market value of about $7.95 million. Two men and one woman, aged between 38 and 49, were arrested.

In the first case, Customs officers intercepted a 48-year-old man and a 49-year-old woman in Tseung Kwan O during an anti-narcotics operation yesterday afternoon. About 3.8kg of suspected drugs, including ketamine, methamphetamine, etomidate capsules, psilocybin mushrooms, MDMA and a batch of suspected drug packaging paraphernalia were found in their residence in the same district. They were then arrested.

In the second case, a 38-year-old male passenger arrived in Hong Kong from Amsterdam, the Netherlands, today. During customs clearance, Customs officers found about 18kg of suspected ketamine inside his check-in suitcase and 33 sticks of duty-not-paid cigarette inside his carry-on baggage. The man was subsequently arrested.

The arrested man and woman in the first case have been jointly charged with one count of trafficking in a dangerous drug and one count of possession of apparatus fit and intended for the inhalation of a dangerous drug. The case will be brought up at the Kwun Tong Magistrates' Courts tomorrow (May 23), while an investigation is ongoing for the second case.

Customs will continue to step up enforcement against drug trafficking activities through intelligence analysis. The department also reminds members of the public to stay alert and not participate in drug trafficking activities for monetary return. They must not accept hiring or delegation from another party to carry controlled items into and out of Hong Kong. They are also reminded not to carry unknown items for other people.

Customs will continue to apply a risk assessment approach and focus on selecting passengers from high-risk regions for clearance to combat transnational drug trafficking activities.

Under the Dangerous Drugs Ordinance, trafficking in a dangerous drug is a serious offence. The maximum penalty upon conviction is a fine of $5 million and life imprisonment.

Under the Dutiable Commodities Ordinance, cigarettes are dutiable goods to which the DCO applies. Any person who imports, deals with, possesses, sells or buys illicit cigarettes commits an offence. The maximum penalty upon conviction is a fine of $2 million and imprisonment for seven years.

Members of the public may report any suspected drug trafficking activities to Customs' 24-hour hotline 182 8080 or its dedicated crime-reporting email account (crimereport@customs.gov.hk) or online form (eform.cefs.gov.hk/form/ced002).

Hong Kong Customs detects two dangerous drugs cases and seizes suspected drugs worth about $7.95 million Source: HKSAR Government Press Releases

Hong Kong Customs detects two dangerous drugs cases and seizes suspected drugs worth about $7.95 million Source: HKSAR Government Press Releases