HK announces 2003 results of Exchange Fund

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Last updated at: (Beijing Time) Friday, January 16, 2004

HK announces 2003 results of Exchange Fund

The Hong Kong Monetary Authority(HKMA) announced Thursday the investment performance of the Exchange Fund for the year 2003.

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The Hong Kong Monetary Authority(HKMA) announced Thursday the investment performance of the Exchange Fund for the year 2003.

It said Hong Kong's Exchange Fund recorded an investment income of 89.6 billion HK dollars (11.55 billion US dollars) in 2003.

The main components of this income were total return from bondsand other investments, valuation gain on and dividends from the Hong Kong equities portfolio, valuation gain on and dividends fromother equities and exchange valuation gain.

After deducting interest and other expenses, net investment income in 2003 was 83.4 billion HK dollars (10.75 billion US dollars).

Of this, the Fiscal Reserves' share amounted to 25.7 billion HKdollars (3.31 billion US dollars) which is more than double the amount budgeted for in the financial year 2003-04.

Commenting on the Exchange Fund results for 2003, Chief Executive of the HKMA Joseph Yam said that the investment environment in 2003 had been particularly volatile and challenging.

He said "the strong recovery in the second half of the year contrasted markedly with a difficult first half, in which world financial markets were clouded with uncertainties about the war inIraq and the performance of the major economies. Income from bonds,though positive, was lower than in previous years, but this was more than offset by gains in equity holdings. The further sharp appreciation of the euro also contributed to the Exchange Fund's investment performance."

Commenting on the outlook for the year ahead, Yam believed thatthe investment environment in 2004 was unlikely to be conducive tothe kind of gains seen by the Exchange Fund in 2003.

He added "the HKMA will exercise vigilance in this rapidly changing environment and will continue, under the guidance of the Exchange Fund Advisory Committee, to manage the Exchange Fund in aprudent manner." ��

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