Hong Kong's Exchange Fund recorded an investment gain of HK$34.5 billion (US$4.4 billion) in the first quarter of 2025, marking its smallest increase in five quarters and a 56% drop from HK$79.2 billion a year earlier [1]. The fund marked its fifth consecutive quarter of gains despite the slowdown [1].
The reduced gain reflected a stock market slump in March triggered by the outbreak of the US-Israel war on Iran on February 28, 2025. Investors moved toward cash and safer assets amid heightened volatility [1]. HKMA chief executive Eddie Yue Wai-man said, "The Middle East conflicts have led the market on a roller coaster, with the global stock market falling 10 per cent in March after the war started" [1].
Following a ceasefire in April, the market recovered somewhat, but uncertainties remain high. Yue also noted that "the interest rate outlook is also affected by the Middle East conflicts, as traders generally expected no interest rate cut this year due to inflation worries from increased oil prices." He added that while the crisis poses challenges, "the local economy and capital market remain resilient. The initial public offering market remains active and the property market has recovered" [1].
At the end of March, the Exchange Fund's total assets stood at HK$4.34 trillion, an increase of HK$19 billion from the end of 2024 [1]. The Hong Kong Monetary Authority released the data Monday during Yue's quarterly meeting with lawmakers [1].
