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). It's primarily used to defend the Hong Kong dollar's peg to the US dollar. The Fund is newsworthy due to recent record earnings in 2025, a 51% increase to HK$331 billion, driven by strong stock market and bond performance. However, the government plans a rare move to withdraw HK$150 billion from the Fund to finance projects like the Northern Metropolis. Financial Secretary Paul Chan has defended this decision as a long-term investment and clarified that no further withdrawals are planned for the next five years. This move has drawn public criticism regarding the lack of immediate budget sweeteners, prompting Chan to brief credit-rating agencies and the IMF. Despite concerns about misuse, some economists believe safeguards are adequate. The Fund's performance and government's utilization remain significant for Hong Kong's financial stability and economic development.