GUM: Nearly 8.2 billion yuan of funds flowed into low-risk assets for hedging, with some members positioning themselves early

According to the latest report from GUM on the Mandatory Provident Fund (MPF) market in August 2024, total assets in the MPF market rose by 2% to HKD 1.26 trillion as of August 31. In August 2024, there was an abnormal change in fund net transfers. A total of HKD 81.9 billion flowed into "Fixed Income Funds," with the fund movement significantly higher than the average from the beginning of the year. Of this amount, HKD 78.5 billion flowed out of "Equity Funds." The changes indicate that some investors actively managing their MPF investments are clearly leaning towards risk aversion. The main reason is estimated to be concerns about a possible economic downturn in the United States and worries about a correction in the US stock market, as well as the increasing expectations of a rate cut by the Federal Reserve.

GUM's strategy and investment analyst, Yun Tianhui, pointed out that the market expects the Federal Reserve to cut interest rates for the first time in September, potentially marking the end of a high-interest rate era that has lasted for two and a half years. However, disappointing US employment data has raised concerns about the outlook for the US economy. The flow of funds reflects a change in members' risk preferences, with nearly HKD 8.2 billion flowing into low-risk assets for hedging in August. Of this amount, HKD 7.9 billion flowed out of equity funds, especially with US stocks recording an outflow of HKD 2 billion in a single month.

Yun Tianhui further pointed out that at the same time, approximately HKD 3.3 billion and HKD 3 billion flowed into conservative funds and global bond funds, respectively, indicating that some members have already positioned themselves in anticipation of the end of the high-interest rate cycle to lock in profits and adjust their bond allocations in preparation for the rate cut