Hong Kong Exchange Fund Posts Record HK$331B Return in 2025

Alvin Lang
Jan 28, 2026 08:54

HKMA’s Exchange Fund achieves 8% investment return with record HK$331 billion income as global markets rally. Total assets reach HK$4.15 trillion.

Hong Kong’s Exchange Fund delivered its highest annual investment income on record in 2025, posting HK$331 billion ($42.5 billion) as global equity markets rallied and the weakening US dollar boosted foreign currency holdings.

The Hong Kong Monetary Authority released unaudited figures on January 28 showing the fund achieved an 8% investment return for the year. Total assets grew HK$70.4 billion to reach HK$4.15 trillion, with accumulated surplus standing at HK$936.1 billion.

Where the Gains Came From

Bond holdings led the charge with HK$142.2 billion in gains. Equity positions added another HK$108 billion combined—HK$33.9 billion from Hong Kong stocks and HK$74.1 billion from overseas equities. Currency translation effects contributed HK$38.4 billion as the dollar dropped roughly 9% against major currencies.

The Investment Portfolio returned 12.4%, while the more conservative Backing Portfolio—which defends the Hong Kong dollar peg—gained 5.2%. The Long-Term Growth Portfolio has delivered an 11.2% annualized return since its 2009 inception through September 2025.

Rare Alignment of Positive Returns

HKMA Chief Executive Eddie Yue noted this marks only the third time in 15 years that all major fund components posted positive returns simultaneously—previously occurring in 2017 and 2020. The Hang Seng Index surged 28% in 2025 while the S&P 500 gained 16%, with both benchmarks hitting record highs.

“The exceptional confluence of multiple favourable factors in the global financial markets in 2025 may not last for a long time,” Yue cautioned. He cited AI investment flows, central bank rate cuts, and better-than-expected outcomes from trade conflicts as key 2025 tailwinds.

Context and Outlook

The Exchange Fund, established in 1935, serves as Hong Kong’s monetary defense system—backing banknote issuance and protecting the currency peg from speculative attacks. The fund’s compounded annual return since 1994 stands at 4.5%, outpacing Hong Kong’s 2.0% inflation rate over the same period.

The HKMA recently doubled its RMB Business Facility to RMB200 billion in late January, signaling continued focus on yuan-denominated operations alongside its traditional dollar-based activities.

For 2026, Yue warned that geopolitical tensions, central bank policy shifts, and AI market dynamics could trigger significant volatility. The authority plans to maintain high liquidity levels and defensive positioning while continuing diversification efforts.

Image source: Shutterstock