Hong Kong Exchange Fund posts first half investment loss of HK$10.6 billion

Hong Kong's Exchange Fund, which is used to back the Hong Kong dollar, posted an investment loss of HK$10.6 billion ($1.37 billion) in the first half of 2020 as the coronavirus outbreak weighed on global financial markets.

The figure compared with a HK$178.4 billion investment gain in the same period a year earlier.

However, second-quarter income offset most of the loss in the previous quarter.

The Exchange Fund recorded HK$101.4 billion of investment income in the second quarter, mainly led by gains on bonds. That followed a loss of HK$112 billion in the first quarter, the Hong Kong Monetary Authority (HKMA) said on Friday.

"The investment environment in the second half of the year remains challenging," HKMA Chief Executive Eddie Yue said in the statement.

"While many governments have begun to relax their anti-epidemic measures, the global economy is still very fragile, and the timing and speed of recovery remain highly uncertain," Yue said, adding geopolitical developments and a risk of resurgence of COVID-19 adds to market uncertainties.

In 2019, the exchange fund recorded adjusted investment income of HK$262.2 billion.

The HKMA is the key manager of the Exchange Fund, which is controlled by the financial secretary and invests in equities, bonds, foreign exchange and other securities and assets.

(Reporting by Twinnie Siu and Donny Kwok; Editing by Alex Richardson and Kim Coghill)