Fiscal Reserves record MOP10 billion income

During the first two quarters of 2017, the government’s Fiscal Reserve recorded an investment income of MOP10.1 billion, according to a statement from the Monetary Authority of Macau (AMCM), representing an annualized rate of return of 4.4 percent.

At the end of June 2017, the total assets of the Fiscal Reserve stood at approximately MOP478.1 billion, composed of the basic reserve of MOP128 billion and the excess reserve of MOP350.1 billion.

Assets of the Fiscal Reserve continued in the first half of 2017 to be divided into the categories of global bands (31.5 percent), global equities (13.1 percent) and money market instruments (55.4 percent). Currency exposure mainly included the use of the USD, HKD and RMB.

Income from equity markets constituted the bulk of the MOP10.1 billion. Representing around MOP6 billion, the AMCM accredited the return to an improvement in the U.S. economy “coupled with a reduction in political risks in the Eurozone, [which] helped fuel a significant rally in global developed market equities.”

Investment in fixed income markets brought the Fiscal Reserves an income of around MOP2.5 billion during the first half of 2017.

“The U.S. Federal Reserve interest rate hikes during the first and second quarter […] brought unfavorable price performance in global bonds,” noted the AMCM statement. “However, on a relative basis, bonds in the U.S. and U.K. outperformed their European peers for the first six months.”

Meanwhile, in the first half of 2017, income from money markets amounted to about MOP1.9 billion.

A small loss was registered by the AMCM in this six-month period in the area of foreign exchange markets.

The reduced strength of the USD from the start of the year – partly owing to “hawkish changes in certain major central banks’ policy tone” – led to a decision to take a hedge against the weakening currency. Subsequently, a controlled loss of MOP0.3 billion was registered in the foreign exchange markets.

Head of AMCM to step down

According to a report by Radio Macau, the current head of the Monetary Authority of Macau (AMCM), Anselmo Teng, will step down from his position shortly. Teng has been in the role since the 1999 handover. He will leave the responsibility for the AMCM in the hands of his colleague, Benjamin Chan, according to the report.