Key Benchmarks Performance
U.S. equity markets led the recent pullback in March. Over the one‑month of March period, the S&P 500 declined by 5.1%, the NASDAQ Composite fell 4.8%, and the Dow Jones Industrial Average dropped 5.4%. These declines erased part of the strong gains accumulated over the previous year, despite the NASDAQ remaining up 24.8% over one year. For the year‑to‑date, the S&P 500 and NASDAQ turned negative, down 4.6% and 7.1% respectively, reflecting a broader reset of growth expectations.
European equities mirrored this weakness, with sharper downside in several markets. The DAX declined 10.3% over the past month and 7.7% YTD, while the CAC 40 fell 8.9% in the month and 4.1% YTD. The FTSE 100 and IBEX 35 also recorded monthly losses of 6.7% and 7.1%, respectively.
Asia showed greater dispersion beneath the headline volatility. North Asian markets experienced sharper corrections following strong prior rallies. South Korea’s KOSPI fell 19.1% over the month, while Taiwan’s TAIEX declined 10.4%, driven largely by profit‑taking in semiconductor and AI‑related stocks. These corrections followed exceptional longer‑term performance, with the KOSPI still up 103.6% over one year and 19.9% YTD, and the TAIEX up 53.3% over one year and 9.5% YTD. In contrast, Southeast Asian markets demonstrated relative resilience. Malaysia’s KLCI declined only 1.5% in March and remained marginally positive (+0.6%) YTD, while Singapore’s Straits Times Index fell 2.2% in the month but gained 5.1% YTD.
Emerging markets continued to diverge sharply. Brazil stood out as a notable outperformer, rising 16.6% YTD despite a modest 0.6% monthly decline, reflecting renewed interest in commodity‑linked markets and improving domestic fundamentals. Thailand also delivered strong gains of 15.0% YTD, even after a 5.2% monthly pullback. By contrast, India and Indonesia faced deeper corrections, with India’s Sensex down 11.5% in the month and 15.6% YTD, and Indonesia’s JCI falling 14.4% in the month and 18.5% YTD, highlighting sensitivity to foreign outflows and valuation resets.
Table 1: Global Key Benchmarks Performance
Source：LSEG Lipper, as of 26/03/31
Asset Types Analysis
The total 376 Hong Kong Mandatory Provident Fund (MPF) registered for sale in Hong Kong posted negative return of 6.1% on average in March of 2025 (as of 26/03/31). Across all fund types, the average returns were -1.4% (YTD), 12.3% (1Y), 25.5% (3Y), and 9.8% (5Y). Money Market funds outperformed other asset types, with a 1-month return of 0.1%. It also outperformed with a YTD return of 0.6% while all other asset types posted negative return on average for 26Q1 period.
Hong Kong MPF Performance by LGC Analysis
There are overall 376 Hong Kong Mandatory Provident Fund (MPF) registered for sale in Hong Kong market with a total 24 Lipper Global Classifications. Among all 24 classifications, only Money Market HKD posted positive return of 0.1% on average in March. For the year-to-date (as of 26/03/31), Equity Korea, Equity Asia Pacific, Money Market Other, Money Market CNY and Equity Asia Pacific ex Japan posted an a positive performance with an average return of 22.7%, 6.1%, 1.3%, 1.3% and 0.9%, separately while Equity China and Equity US posted negative return of 6.2% and 4.7%, respectively.
Figure1：Top/Bottom 10 Hong Kong MPF Performance by Lipper Global Classifications, March 2026
Source：LSEG Lipper, as of 26/03/31, in Hong Kong Dollar
Figure2：Top/Bottom 10 Hong Kong MPF Performance by Lipper Global Classifications, Year-to-Date (as of 26/03/31)
Outlook
Source：LSEG Lipper, as of 26/03/31, in Hong Kong Dollar
Hong Kong will implement a direct diesel subsidy scheme for local oil companies after lawmakers approved a HK$1.8 billion government relief package aimed at easing the impact of surging fuel prices on the transport sector over the next two months. The measure targets industries most exposed to fuel cost inflation, including logistics, construction, public transport, and cross‑border freight operations.
Under the scheme, subsidies will be paid directly to oil companies based on diesel sales volumes, rather than reimbursing end users. The government’s rationale is that this structure allows for faster deployment and immediate pass‑through to transport operators, helping to stabilize operating costs at a time when global energy prices remain volatile.
From a macroeconomic perspective, the policy reflects growing concern about cost‑push inflation and its downstream effects on Hong Kong’s already fragile post‑pandemic recovery. Diesel prices play a critical role in shaping logistics costs, construction expenses, and public transport fares. By cushioning these inputs, the government aims to prevent higher fuel prices from cascading into broader consumer price inflation, which would further pressure household purchasing power.
The transport and logistics sector is a key economic artery for Hong Kong, underpinning retail supply chains, port activity, food distribution, and daily commuter mobility. Without intervention, elevated diesel prices risk compressing margins for small and medium‑sized operators, potentially leading to service cutbacks, fare increases, or business closures. In this context, the subsidy can be seen as a short‑term stabilization measure designed to preserve employment, service continuity, and price stability. However, the scheme also raises questions about market efficiency and fiscal sustainability.
In the broader fiscal context, the subsidy adds to ongoing pressures on public finances. While Hong Kong retains substantial fiscal reserves, repeated short‑term relief measures risk creating expectations of government support whenever external shocks occur. Over time, this could complicate policy discipline and divert resources from longer‑term structural priorities such as transport electrification, productivity upgrades, or green energy transition.
At the same time, the scheme highlights the tension between short‑term economic relief and long‑term environmental objectives. Diesel subsidies run counter to Hong Kong’s decarbonization goals and may delay incentives for fleet modernization or alternative fuel adoption. Policymakers will therefore face increasing pressure to ensure that emergency measures remain temporary and are paired with clearer transition pathways once fuel price volatility subsides.
Overall, while the diesel subsidy scheme may provide immediate relief to critical economic sectors and help contain inflationary spillovers, its ultimate impact on the Hong Kong economy will depend on execution, transparency, and duration. The episode underscores the city’s vulnerability to external energy shocks—and the growing challenge of balancing economic resilience, fiscal prudence, and sustainability objectives in a highly open and energy‑import‑dependent economy.
