January 5, 2020

Hong Kong RFS Funds Put Up Positive Numbers Despite Turmoil

by Xav Feng.

Overall, all Hong Kong registered unit trusts posted positive returns of 3.01% on average in December 2019, and 16.73% for all of 2019. Among all asset types, commodity and equity funds took the lead, posting 4.29% and 4.23% average returns, respectively, in December 2019. Equity funds posted positive returns of 21.94% for the year and outperformed other asset types.

Performance of All Type of Assets for Funds RFS in Hong Kong (% Growth in HKD)

Among the best-performing asset classes by Lipper Global Classifications, the top five gainers in December 2019 were: Alternative Equity Leveraged (+14.15%), Equity Brazil (+12.22%), Equity Sector Gold & Precious Metals (+11.35%), Equity Sector Real Estate Other (+10.68%), and Alternative Managed Futures (+10.59%). Alternative Dedicated Short Bias, Equity Vietnam, and Alternative Equity Market Neutral posted negative return of 7.87%, 2.54%, and 1.16%, respectively.


Ten Top- and Bottom-Performing Fund Sectors RFS in HK, Dec 2019(in HKD)

The top five leading groups under Lipper Global Classifications for the whole year of 2019 were: Equity Sector Gold & Precious Metals (+40.72%), Equity Russia (+38.41%), Equity UK Small & Mid Cap (+37.57%), Equity Sector Information Tech (+37.39%), and Equity China Small & Mid Cap (+33.88%). Alternative Dedicated Short Bias, Commodity Agriculture, and Equity India Small and Mid-Cap posted negative returns of 16.38%, 4.28%, and 3.05%, respectively.


Ten Top- and Bottom-Performing Fund Sectors RFS in HK, Year 2019(in HKD)

Hong Kong has been rocked by anti-government protests since June, triggered by a now-withdrawn extradition bill. Economic activity in Hong Kong weakened significantly in 2019 as rising trade tensions between the U.S. and China and heightened uncertainty took a toll on exports and investment, while private consumption and visitor arrivals have declined due to the social unrest that started last summer.

Hong Kong’s economy is expected to contract 1.9% in 2019 as the International Monetary Fund expected, worse than the government’s earlier forecast of a 1.3% decline, as officials warned that global growth had yet to show signs of recovery despite the trade war truce.

On the external side, further escalation of trade tensions between the U.S. and China, a significant slowdown of growth in mainland China, as well as additional barriers, could negatively affect growth in Hong Kong. On the domestic side, a deterioration of the sociopolitical situation could further weaken economic activity and negatively affect Hong Kong’s competitiveness in the long term.


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