Exchange Fund Position at end-December 2025
The following is issued on behalf of the Hong Kong Monetary Authority:
The Hong Kong Monetary Authority (HKMA) today (January 28) published the unaudited financial position of the Exchange Fund at end-December 2025.
HKMA, Photo source: reference image
The Exchange Fund recorded an investment income of HK$331.0 billion in 2025. The main components were:
- gains on bonds of HK$142.2 billion;
- gains on Hong Kong equities of HK$33.9 billion;
- gains on other equities of HK$74.1 billion;
- positive currency translation effect of HK$38.4billion on non-Hong Kong dollar assets (Note 1); and
- gains on other investments of HK$42.4 billion (Note 2).
Fees on placements by the Fiscal Reserves and placements by the Hong Kong Special Administrative Region (HKSAR) Government funds and statutory bodies were HK$16.5 billion (Note 3) and HK$14.7 billion respectively in 2025, with the rate of fee payment at 4.4 per cent for 2025.
The Abridged Balance Sheet shows that the total assets of the Exchange Fund increased by HK$70.4 billion, from HK$4,081.0 billion at the end of 2024 to HK$4,151.4 billion at the end of 2025. Accumulated surplus stood at HK$936.1 billion at end-December 2025.
The Exchange Fund recorded an investment return of 8.0 per cent in 2025 (Note 4). Specifically, the Investment Portfolio achieved a rate of return of 12.4 per cent and the Backing Portfolio gained 5.2 per cent. The Long-Term Growth Portfolio (LTGP) recorded an annualised internal rate of return of 11.2 per cent since its inception in 2009 up to the end of September 2025.
Commenting on the performance of the Exchange Fund in 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 factors such as trade conflicts and geopolitical tensions. In particular, following the announcement of a series of tariff measures by the US Government in early April, global equity and bond markets fell sharply. As we entered the second half of the year, the investment environment improved notably, bolstered by the smaller-than-expected impact from trade conflicts as well as the swift advancement of artificial intelligence technology which attracted investment flows. Policy rate cuts by major central banks during the year also helped boost market sentiment.
"Overall, the global financial markets showed strong resilience in 2025. Major stock markets saw broad-based gains, with many of them setting record highs. The S&P 500 finished the year up 16 per cent. Benefitting from capital inflows into the Hong Kong stock market, the Hang Seng Index rose by 28 per cent in 2025. The US Treasuries also performed decently on the back of the US Federal Reserve's rate cuts. On foreign exchange, the US dollar depreciated by approximately 9 per cent against other major currencies.
"Against this backdrop, the Exchange Fund's investment income in 2025 was a record high. Its bond and equity holdings, and the LTGP all achieved positive returns. The Exchange Fund also registered a positive currency translation effect on its non-Hong Kong dollar assets due to the weakening of the US dollar.
"It is exceptional for all main components of the Exchange Fund to record positive returns in a single year. This has occurred only two times over the past 15 years in 2017 and 2020. In addition, the investment of the Exchange Fund entails costs and expenses, such as fees on placements by the Fiscal Reserves and by the HKSAR Government funds and statutory bodies, as well as interest payment on Exchange Fund Bills and Notes and other expenses."
Mr Yue said, "The exceptional confluence of multiple favourable factors in the global financial markets in 2025 may not last for a long time. Looking ahead to 2026, factors such as global economic conditions, monetary policies of major central banks, developments in artificial intelligence, and geopolitical conflicts could affect the performance of financial markets. Should market conditions deteriorate, the financial markets could fluctuate significantly.
"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 September 2025. Valuation changes of these investments from October to December are not yet available.
Note 3: This does not include the 2025 fee payment to the Future Fund because such amount will only be published when the composite rate for 2025 is available.
Note 4: This return excludes the performance of the Strategic Portfolio and only includes the performance of LTGP up to the end of September 2025. The audited full year return will be published in the 2025 annual report.
Source: AI-found images
