A man walks past an electronic sign displaying stocks at
A man walks past an electronic sign displaying stocks at Exchange Square in Hong Kong.

MPF consultancy GUM on Friday (September 18) released its MPF market analysis report for August 2026. As at August 31, total MPF assets rose 1.6% month on month to HK$1.706 trillion, breaking through HK$1.7 trillion for the first time. Compared with the approximately HK$1.55 trillion reported by the Mandatory Provident Fund Schemes Authority at the end of 2025, assets have increased by about 10% this year.

US equity funds gain for five consecutive months

GUM estimates that MPF members switched a net total of more than HK$12 billion into US equity funds in the first eight months of the year. Hong Kong equity funds, including index-tracking funds, recorded combined net outflows of about HK$10.26 billion, making them the equity fund category most reduced by members this year.

US equity funds recorded net inflows of HK$2.24 billion in August, the highest among all fund categories that month and up from nearly HK$2 billion in July. The funds have recorded net inflows for five consecutive months since April. Hong Kong equity funds, meanwhile, saw combined net outflows of about HK$1.85 billion in August.

GUM director of strategy and investment analysis Wan Tin-fai said members' switching preferences this year could be summed up as “increasing US equities and reducing Hong Kong equities”, with allocation changes closely tracking financial-market performance and investment sentiment.

Hong Kong equities did not see one-way outflows every month

Fund flows in Hong Kong equity funds did not move in the same direction every month. When the Hang Seng Index hit a year-to-date low in June, Hong Kong index-tracking equity funds recorded net inflows of about HK$690 million. When the index rebounded by nearly 3,000 points in July, the same funds instead recorded net outflows of about HK$3.6 billion.

Compared with the size of the Hong Kong market

Overall trading in Hong Kong stocks showed no signs of a liquidity shortage. Hong Kong Exchanges and Clearing (0388.HK) data showed average daily turnover in Hong Kong stocks reached HK$282.5 billion in the first eight months of the year, up 14% year on year, while August turnover stood at HK$253.4 billion. IPO fundraising in the first eight months reached HK$342.4 billion, up 153% year on year.

On this basis, the HK$10.26 billion in cumulative net outflows from Hong Kong equity funds in the first eight months was equivalent to about 3.6% of average turnover on a single trading day (calculated independently from the two figures above and provided for scale reference only). MPF figures reflect estimated net amounts switched by members between funds, and are not the same as actual buying and selling in the stock market.

Return gap and GUM's explanation

GUM data showed that Hong Kong index-tracking equity funds fell 10.3% in the first half, while US equity funds gained about 8% over the same period. By the end of August, the year-to-date returns of Hong Kong index-tracking equity funds and Hong Kong equity funds were just 0.5% and -0.1%, respectively.

GUM chief investment officer Lau Ka-hung said in June that the performance of Hong Kong equity funds had been weighed down mainly by slower revenue growth and downgraded earnings expectations among large-cap traditional technology and internet companies in the Hang Seng Index, as well as a lack of support from the artificial intelligence (AI) infrastructure theme. In its August report, GUM added that Hong Kong stocks retreated after a sharp rebound in July, while mainland and Hong Kong technology and internet giants were weighed down by earnings pressure from “high investment and slow returns”.

Funds did not flow only into US equities. The five asset categories with the largest net inflows in August were, in order, US equity funds, the Default Investment Strategy—Core Accumulation Fund, global equity funds, Asian equity funds, and the Default Investment Strategy—Age 65 Plus Fund. The categories with the largest net outflows were MPF conservative funds, the two Hong Kong equity fund categories, and mixed-asset funds with a high equity weighting. GUM said global markets generally performed well in the third quarter, while the Israel-Iran conflict did not escalate further and market fear eased, prompting funds to move out of more conservative or weaker-performing funds.

Data does not reflect Fed rate hike

The above data runs to the end of August and does not reflect the US Federal Reserve's rate decision on September 16. The Fed raised rates by 0.25 percentage points that day, lifting the federal funds target range to 3.75% to 4.00%. It was the first rate hike since July 2023. The median projection in the latest dot plot indicated that rates were expected to be raised once more this year.

GUM had earlier forecast that funds would continue to rotate between regions and markets in September, while maintaining a neutral view on individual markets. The market is also focusing on the direction of US interest-rate policy and the impact of the US midterm elections in November on market conditions.