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Hong Kong’s stock market soared 5.3% in May and posted a positive return of 16.1% for the year-to-date period (as of 2025/05/31). China Shanghai Composite Index rose 2.1% in May and posted a negative return of 0.1% for the year-to-date period. US Philadelphia SE Semiconductors CR led global markets with a robust 12.5% gain, followed by the Nasdaq Composite at 9.6% in May, reflecting renewed investor optimism in technology and semiconductor stocks. Vietnam Index (+8.7%) and Jakarta SE Composite Index (+6.0%) were among the top performers, indicating strong momentum in select Asian markets. US S&P 500 (+6.2%) and Dow Jones (+3.9%) posted healthy gains, with the S&P 500 outpacing the Dow, driven by growth sectors. Spain’s IBEX 35 (+6.5%), Germany’s DAX (+4.7%), and France’s CAC 40 (+2.1%) posted solid returns, supported by improving economic data and corporate earnings. Thailand SET (-4.0%), FTSE Bursa Malaysia KLCI (-2.1%), and S&P 500 Health Care TR (-5.5%) lagged, reflecting sector-specific and regional headwinds.

Spain’s IBEX 35 (+22.1%), Germany’s DAX (+17.5%), and Hong Kong’s Hang Seng (+16.1%) led global returns YTD. KOSPI (+12.4%) and Vietnam Index (+5.2%) were positive, while Taiwan SE (-7.3%), Nikkei 225 (-4.8%), and Shanghai Composite (-0.1%) underperformed, highlighting varied regional dynamics. US Nasdaq Composite (-1.0%) and S&P 500 (+0.5%) were relatively flat YTD, as earlier gains were offset by recent volatility and sector rotation. Brazil’s Sao Paulo SE IBX (+13.7%) and Indonesia’s Jakarta SE Composite (+1.4%) showed resilience, while Malaysia (-8.2%) and Thailand (-17.9%) faced notable declines.

Table 1: Global Key Benchmarks Performance

Source：LSEG Lipper, as of 2025/05/31

 Asset Types Analysis

The total 376 Hong Kong Mandatory Provident Fund (MPF) registered for sale in Hong Kong posted a positive return of 3.8% on average in May of 2025 (as of 2025/05/31). Across all fund types, the average returns were 3.8% (1M), 6.8% (YTD), 11.1% (1Y), 13.3% (3Y), and 22.7% (5Y), illustrating the benefits of diversification and the impact of different market cycles on overall fund performance. Equity funds outperformed other asset types, with a 1-month return of 5.9% and a YTD return of 9.5%. The 1-year and 3-year averages were strong at 16.3% and 18.4%, respectively. Over 5 years, equity funds delivered the highest average return of 35.7%, underscoring the growth potential of stock markets over longer periods. Equity funds consistently delivered the strongest returns across all timeframes, especially over the long term. Mixed asset funds provided a balanced risk-return profile, while money market funds prioritized safety but offered lower returns. Bond funds faced challenges in the long run, highlighting the importance of asset allocation based on investment horizon and risk tolerance.

Hong Kong MPF Performance by LGC Analysis

There are overall 376 Hong Kong Mandatory Provident Fund (MPF) registered for sale in the Hong Kong market with a total of 24 Lipper Global Classifications. Among all 24 classifications, Equity Korea, Equity US, and Equity Asia Pacific posted 12%, 6.9%, and 6.7% on average, separately, and took the leading positions among all MPF classifications, while Equity Sector Healthcare was one and the only sector which posted negative return of 4.9% in May. For the year-to-date period (as of 2025/05/31), Equity Korea, Equity Hong Kong, and Equity Europe posted an outstanding performance and posted an average return of 30.5%, 16.3%, and 16.1%, separately, while Equity Sector Healthcare was also one and the only sector posted negative return of 2.5%.

Figure 1: Top/Bottom 10 Hong Kong MPF Performance by Lipper Global Classifications, May 2025

Source： LSEG Lipper, as of 2025/05/31, in Hong Kong Dollar

Figure 2: Top/Bottom 10 Hong Kong MPF Performance by Lipper Global Classifications, Year-to-Date (as of 2025/05/31)

Source： LSEG Lipper, as of 2025/05/31, in Hong Kong Dollar

Outlook

Both mainland China and Hong Kong have demonstrated notable resilience in the aftermath of the US-China trade tensions initiated during the Trump administration. The ongoing competition between the US and China continues to impact Hong Kong across multiple dimensions, with Beijing’s evolving counterstrategies carrying significant implications for the Hong Kong Special Administrative Region (HKSAR). Since 2018, China’s central government has diversified its international engagement, deepening relationships with the Association of Southeast Asian Nations (ASEAN), the Middle East, and Belt and Road Initiative countries. Hong Kong has proactively aligned with this strategy, securing key agreements and attracting substantial investment from the Middle East.

Hong Kong’s economic resilience and adaptability are evident as it navigates global headwinds and shifting regional dynamics. The surge in mainland consumer IPOs, active engagement with new international partners, and policy-driven consumption initiatives on the mainland all point to a new chapter for Hong Kong—one that requires strategic innovation to sustain growth and relevance in the global marketplace. Recent developments offer encouraging signs for Hong Kong’s economy. Notably, there has been a surge in mainland Chinese consumer companies pursuing initial public offerings (IPOs) in Hong Kong. Since September 2024, 14 such firms have listed—more than double the total for 2023—reflecting robust policy support and strong performance of consumer stocks in the Hong Kong market. This momentum has positioned Hong Kong as an increasingly attractive destination for consumption-related listings, further cementing its status as a leading international financial center.

These trends underscore the need for Hong Kong to recalibrate its strategy for stimulating consumption and revitalizing the retail sector. Hong Kong has relied heavily on attracting mainland visitors seeking international goods. However, interest from these shoppers is waning, while more Hong Kong residents are traveling north to spend across the border. In response, Hong Kong must pivot its approach—redirecting efforts to attract global consumers interested in purchasing mainland products within Hong Kong, leveraging its unique position as a gateway for international commerce.

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