HKMA Reports HK$134.7 Billion Investment Income for Exchange Fund in First Half of 2026

Exchange Fund Position at end-June 2026

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

The Hong Kong Monetary Authority (HKMA) today (July 28) published the unaudited financial position of the Exchange Fund at end-June 2026.

The Hong Kong Monetary Authority, Photo source: reference image

The Exchange Fund recorded an investment income of HK$134.7 billion in the first half of 2026. The main components were:

• gains on bonds of HK$49.1 billion;

• losses on Hong Kong equities of HK$11.8 billion;

• gains on other equities of HK$53.7 billion;

• positive currency translation effect of HK$34.3 billion on non-Hong Kong dollar assets (Note 1); and

• gains on other investments of HK$9.4 billion (Note 2).

Fees on placements by the Fiscal Reserves and placements by the Hong Kong Special Administrative Region Government funds and statutory bodies were HK$10.9 billion (Note 3) and HK$5.8 billion respectively in the first half of 2026, with the rate of fee payment at 4.8per cent for 2026.

Total assets of the Exchange Fund stood at HK$4,463.6 billion at end-June 2026, an increase of HK$302.4 billion from the end of 2025. Accumulated surplus stood at HK$862.7 billion at end-June 2026.

The Chief Executive of the HKMA, Mr Eddie Yue,said, "Despite brief periods of heightened market volatility in March due to geopolitical tensions in the Middle East, global market sentiment staged a notable recovery in the second quarter as tensions moderated. For the first half of 2026 as a whole, the global financial markets performed well in general. Specifically, driven by artificial intelligence (AI)-related investment demand, the strong performance in the semiconductor and technology hardware sectors propelled the US and several major Asia-Pacific equity markets to new highs again. As for the bond market, the US Treasury yield curve generally shifted upward in the first half following market concerns over rising US inflation, which were triggered by surges in international oil prices and supply chain disruptions.

"Against this market backdrop, the Exchange Fund recorded an investment income of HK$134.7 billion in the first half of 2026. Despite losses on investments in Hong Kong equities due to the broad market decline, the Exchange Fund's overall equity holdings achieved solid gains, driven by the strong performance in other equities. As for bond investments, US dollar bond yields remained at relatively high levels, continuing to provide steady interest income for the bond portfolio. Additionally, the Exchange Fund registered a positive currency translation effect on its non-Hong Kong dollar assets due to exchange rate movements."

The Hong Kong Monetary Authority, Photo source: reference image

He added, "Looking ahead to the second half of the year, the global investment markets face multiple uncertainties. Following the marked increase in prices of AI-related assets, some market participants have begun to focus on whether major corrections will occur and affect the broader market. On monetary policy, the Federal Reserve (Fed)'s policy path forward remains dependent on uncertainties around the inflation trends and labour market conditions in the US. In addition, with the Fed's recent pivoting away from forward guidance, the financial markets may become more sensitive to incoming economic data, potentially amplifying market volatility. Should geopolitical tensions escalate again and disrupt global supply chains and energy prices, market concerns over the inflation and interest rate outlook may be deepened. Moreover, due to frequent fluctuations in exchange rates, the investment gains from the positive foreign currency translation effect in the first half of 2026 may not be sustained through 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 2026. Valuation changes of these investments from April to June are not yet available.

Note 3: This does not include the 2026 fee payment to the Future Fund because such amount will only be disclosed when the composite rate for 2026 is available.

Photo source: HKSAR Government Press Releases

Photo source: HKSAR Government Press Releases

Hong Kong Customs seizes suspected smuggled live turtles and turtle eggs

Hong Kong Customs on July 14 detected a smuggling case involving a cross-boundary private car at the Shenzhen Bay Control Point and seized 216 live turtles and two turtle eggs with an estimated market value of about $21,800.

Through risk assessment, Customs that day intercepted an outgoing private car at the control point. Upon inspection, Customs officers found the batch of live turtles and turtle eggs in the boot of the vehicle. A 52-year-old local male driver was arrested and has been released on bail pending investigation.

Customs will continue to combat cross-boundary smuggling activities with firm enforcement action based on risk assessment and intelligence analysis.

Smuggling is a serious offence. Under the Import and Export Ordinance, any person found guilty of importing or exporting unmanifested cargo is liable to a maximum fine of $2 million and imprisonment for seven years.

Members of the public may report any suspected smuggling 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 on July 14 detected a smuggling case involving a cross-boundary private car at the Shenzhen Bay Control Point and seized 216 live turtles and two turtle eggs with an estimated market value of about $21,800. Photo shows the suspected smuggled live turtles and turtle eggs seized. Source: HKSAR Government Press Releases