Hong Kong's Exchange Fund recorded a net loss of 74.9 billion dollars (9.6 billion US) in 2008, as turmoil on global stock markets battered its investments, the central bank said Wednesday. The fund, which is partly used to back the Hong Kong dollar's link to the greenback, last year recorded a negative investment return of 5.6 percent, the Hong Kong Monetary Authority said in a statement.
It is the fund's first negative annual return since records began in 1994. The fund had made a record return of 142.2 billion dollars in 2007, figures released by the HKMA showed. HKMA chief executive Joseph Yam said the loss was due to exceptional turbulence in equity markets during 2008.
"The world financial crisis weighed heavily on global business sentiment and investor confidence," he said. "Following a very difficult third quarter, the Exchange Fund made a positive return in the fourth quarter as markets stabilised somewhat," he added. Yam said he expected the investment environment to continue to be difficult this year. Much of the fund was invested in Hong Kong shares. The benchmark Hang Seng Index dropped 48.3 percent in 2008.