Hong Kong Monetary Authority Investment Portfolio

HKMA

Hong Kong (China) US$ 326.7 Billion
Established: 1993
Transparency Rating: 8
View Sovereign Fund Transaction Data
View Asset Allocation		 Origin: Non-Commodity
Firm Investment Style: Mixed
Entity Structure: Fund
Pop Est.: 7.18 million – 2013 HK
Wealth Per Capita Est.: $45,495
Summary
The Exchange Fund was established in 1935. In April 1993, the Hong Kong Monetary Authority (HKMA) was created after the merger of the Office of the Exchange Fund and the Office of the Commissioner of Banking. The HKMA manages the Exchange Fund. The Exchange Fund acts as a stabilizer and invests primarily in its local exchange, the Hang Seng. All Exchange Fund assets can be used to support the Hong Kong dollar exchange rate. The Exchange Fund uses global external managers to administer about one third of its total assets, including all of its equity portfolios and other specialized assets.

Background
The exchange fund can be broken into three parts:

Part 1: Backing Portfolio
The purpose of this portfolio is to hold liquid U.S. dollar denominated assets for the purpose of providing full backing for the Monetary Base of Hong Kong as required under the Currency Board arrangements

Part 2: Investment Portfolio
The Investment Portfolio is invested primarily in the bond and equity markets of the member countries of the Organization for Economic Co-operation and Development to preserve the value and long-term purchasing power of the assets.

Part 3: Strategic Portfolio
It was established in 2007 to hold shares in Hong Kong Exchanges and Clearing Limited.

Strategy & Objectives
The EFAC has a number of investment objectives including: preserving capital, ensuring that the entire monetary base at all times will be fully backed by highly liquid US dollar denominated securities, ensuring sufficient liquidity for maintaining stability and achieve returns to preserve long-term purchasing power of the fund.

Governance
The Exchange Fund is under the control of Hong Kong’s Financial Secretary and may be invested in any securities or other assets he considers appropriate, after consulting the Exchange Fund Advisory Committee (EFAC).

Sovereign Wealth Enterprises
Real Gate Investment Company
Real Gate Investment Company (RGIC) is a wholly-owned company that has made investments into two undisclosed real estate joint venture companies. These companies are incorporated outside of Hong Kong and have themselves made overseas investments. In one of the companies, RGIC owns a 74 percent stake, the other a 51 percent stake.

Eight Finance Investment Company
Formed in 2009, Eight Finance Investment Company pursues alternative investments for the HKMA.

  • Drawbridge Investment
  • Debt Capital Solutions Company

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