Annual fiscal reserves investment return mildly up


Investment income from the MSAR’s fiscal reserves totalled MOP3.31 billion (US$413.8 million) for 2016, representing an annual return of 0.8 per cent, a slight increase of 0.1 percentage point from 2015, revealed a release from the Monetary Authority of Macau (AMCM) yesterday.
According to AMCM, total assets of the city’s fiscal reserves reached MOP438.7 billion as at the end of 2016, expanding 27 per cent year-on-year.
The reserve’s investment in equity and the foreign exchange markets both recorded losses for the year, amounting to MOP500 million and MOP2.07 billion, respectively.
AMCM explained that the currency revaluation loss on the foreign exchange market is due to ‘a weaker year-end level of some major currencies,’ specifically Renminbi’s accumulated depreciation.
Meanwhile, investment income from the bond market amounted to MOP3.16 billion, remaining the largest income source of the reserves, while investment in money market placements contributed some MOP2.73 billion in income for the reserves.
Of the total foreign reserves assets as at the end of last year, some 60.3 per cent were denominated in U.S. dollars, 22.5 per cent in Hong Kong dollars and 13.4 per cent in Renminbi, including both offshore and onshore ones.
Assets denominated in the local currency of the Macau Pataca and Australian dollar, meanwhile, accounted for 2.9 per cent and 0.7 per cent of the total, respectively.
For this year, the local monetary authority believes the global bond market may go through difficult times. ‘The U.S. Federal Reserve is widely expected to hike its benchmark official rate in a gradual manner. Major economies around the world have come to an important crossroads with their quantitative easing measures coming to an end,’ the Authority notes.
‘In response to these expectations, the Fiscal Reserve would seize market opportunities to divert more resources into equity markets for a more diversified asset mix,’ AMCM wrote in the release, indicating it may look into opportunities for investment co-operation via different platforms, including the Silk Road Fund, China-LAC Industrial Co-operation Investment Fund Co. Ltd. and China-Africa Fund for Industrial Co-operation Co. Ltd. 
‘All of these are aimed at achieving a better diversification benefit from a global portfolio, while minimizing risks assumed,’ the Authority pronounced.