Hong Kong's Mandatory Provident Fund is on course to lose about 1.54% in October, according to an estimate from research firm MPF Ratings, which would follow a 1.47% drop in September and give the city's compulsory pension system its first back-to-back monthly loss this year.

The estimate, based on the firm's All Fund Performance Index as of Oct. 20, works out to an investment loss of about HK$25.9 billion, or HK$5,217 for each of the system's 4.97 million members. For savers in Hong Kong, many of whom shifted money into Asian equity funds during this year's rally, the reversal is a reminder of how quickly gains in a single region can unwind.

The firm published its figures on Oct. 23, before the month's final trading week, so the final October number could differ.

Asian Equity Funds Set to Give Back a Third of Their Gains

The pullback was concentrated in the region. MPF Ratings blamed fading optimism about artificial intelligence and a weak Chinese domestic economy for the slide in Asian, Hong Kong and China equities. The pressure continued after the estimate's cutoff: on Oct. 29, Capital Times reported that Samsung dragged the Kospi down 3% as Alphabet's cash burn cooled the AI rally.

Francis Chung, chairman of MPF Ratings, said Asian equity funds had been on track in May for a 30% return in 2026. That figure has since halved, he said, and the category is likely to lose around 7% in October alone, giving up roughly one-third of its year-to-date gain this month.

Hong Kong and China equity funds are now on track to be the worst-performing MPF asset class of 2026, the firm said. That was already visible earlier in the autumn. Consultancy GUM said in early October that Asian equity funds had returned 24.3% year to date while Hong Kong equity funds had fallen 3.8%, according to The Standard. GUM also counted net outflows of more than HK$10 billion from Hong Kong equity funds, including index trackers, this year, as members moved toward U.S., Asian and Japanese equity funds.

Still on Track for a Fourth Year of Gains

Even with the losses, the system remains in positive territory for 2026. MPF Ratings estimated the year-to-date return at 4.57% as of Oct. 20, equal to an investment gain of about HK$71.0 billion, or HK$14,945 per member.

Including new contributions, it expects total MPF assets to finish October near HK$1.661 trillion. That would be HK$22.9 billion lower than at the end of September but HK$107 billion higher than at the start of the year. The average account balance would be about HK$334,316.

Chung said a positive full-year result would give the MPF four straight years of gains, a run achieved only once before, from 2003 to 2007.

Per-member estimates vary between data providers because they use different indexes and cut-off dates. GUM put the average gain per member at HK$20,287 for the first nine months, through September, before the October declines.

The regulator's own figures show where the system stood before the selloff. Provisional data from the Mandatory Provident Fund Schemes Authority (MPFA) showed equity funds, which hold nearly half of MPF net assets, returned an average 10.3% in the 12 months through September, The Standard reported. Results ranged from a gain of more than 98% for the best fund to a 15.7% loss for the worst. The Core Accumulation Fund under the default investment strategy (DIS) returned 9.5% over the same period.

Since the system began, equity funds have returned an average 5.1% a year and mixed-asset funds 4.7%, against annual inflation of 1.8%, the MPFA said.

Members Turn to Default Funds

Fund flows suggest some members were already becoming more cautious. GUM said the DIS Core Accumulation and Age 65 Plus funds drew combined net inflows of about HK$10.9 billion this year, and that MPF Conservative Funds swung to net inflows of about HK$2.9 billion in July and August from outflows of about HK$3 billion in the first half.

Members are also trading more. GUM estimated full-year net switching at HK$74.7 billion, about 25.5% more than in 2025 and the highest in five years, which it linked partly to all schemes moving onto the eMPF Platform.

Chung used the October figures to argue for diversification, saying the DIS funds, with their spread of assets and automatic reduction of risk as members near retirement, help limit uncertainty. The MPFA has repeatedly told members that MPF saving spans more than 40 years and that trying to time the market can lead them to buy high and sell low.

Member sentiment held up before the selloff. A GUM survey of 808 members taken in August found confidence that the MPF can support retirement rose to 5.1 out of 10, a 15-year high, from 4.0 in 2025, The Standard reported on Oct. 21.

The next data points are the MPFA's provisional figures for October, which the regulator typically publishes early in the following month, and the final MPF Ratings and GUM tallies for the month. A November recovery in Asian equities would decide whether the system keeps its fourth year of gains.

This article is general information, not financial advice.