Exchange Fund

The Exchange Fund is Hong Kong's main investment arm and de facto sovereign wealth fund, managed by the Hong Kong Monetary Authority (HKMA). Established in 1993, it serves to defend the Hong Kong dollar and maintain monetary stability. It's newsworthy due to recent government decisions to draw from the fund for major projects like the Northern Metropolis, a rare move that has sparked debate about its long-term financial discipline. The fund recently reported record earnings for 2025, a 51% increase to HK$331 billion, driven by strong stock market returns and rising gold prices. While a HK$150 billion transfer was planned, the government states no further transfers are expected in the next five years due to a projected surplus. The fund's performance and government's usage are closely watched by credit-rating agencies and the IMF, highlighting its significance to Hong Kong's financial health and economic development.