HKMA warns of second‑half risks from potential AI asset corrections and uncertainty over the US rate path
2-MIN READ2-MIN ListenEnoch YiuPublished: 6:10pm, 28 Jul 2026Updated: 6:13pm, 28 Jul 2026The Exchange Fund, the war chest used to defend the local currency, reported a 37 per cent decline in first-half earnings as losses in Hong Kong equities and weaker bond returns weighed on performance, the Hong Kong Monetary Authority (HKMA) said on Tuesday.
Earnings stood at HK$134.7 billion (US$17.17 billion), down from the record half-year return of HK$214 billion in 2025.
The Hong Kong stock portfolio swung to a HK$11.8 billion loss from a HK$22.9 billion gain a year earlier.
The Hang Seng Index also fell 11 per cent in the first six months of 2026 amid worries over rising interest rates and corporate earnings.
“Despite brief periods of heightened market volatility in March due to geopolitical tensions in the Middle East, global market sentiment staged a notable recovery in the second quarter as tensions moderated,” said Eddie Yue Wai-man, chief executive of HKMA, in a statement.
“Despite losses on investments in Hong Kong equities due to the broad market decline, the Exchange Fund’s overall equity holdings achieved solid gains, driven by the strong performance in other equities.”
