Image Source: Pixabay

Key Benchmarks Performance 

2025 concluded with a significant divergence in global equity performance. While the broader trend for the year was overwhelmingly positive—driven by a semiconductor supercycle and recovery in Asian manufacturing—December saw a distinct rotation. Capital flowed aggressively into South Korea (KOSPI) and Southern Europe (IBEX 35), while US tech indices (Nasdaq, S&P 500) entered a consolidation phase to close out the year. South Korea’s KOSPI Composite Index, the undisputed champion of 2025, delivering a massive +75.6% return for the year and surging +7.3% in December alone. Spain’s IBEX 35, a surprising powerhouse in Europe, up +49.3% for the year and +5.7% in the final month, significantly outperforming its peers in France (CAC 40) and Germany (DAX).
Aside from Korea and Taiwan, Vietnam emerged as a top frontier market, rallying +40.9% for the year. Hong Kong Hang Seng index also staged a strong recovery year, up +27.8%, despite a weak December (-0.9%). Southeast Asia remained split. While Vietnam soared, Thailand (SET) and the Philippines (PSEi) struggled, posting negative annual returns of -10.0% and -7.3% respectively, decoupling from the broader regional bull market.

Table 1: Global Key Benchmarks Performance

(Click on image to enlarge)

Source：LSEG Lipper, as of 25/12/31

Asset Types Analysis 

The total 375 Hong Kong Mandatory Provident Fund (MPF) registered for sale in Hong Kong posted rose 0.7% on average in December of 2025 (as of 25/12/31). Across all fund types, the average returns were 17.4% (1Y), 33.3% (3Y), and 13%(5Y). Equity funds outperformed other asset types, with positive returns of 26.2% for the whole year period of 2025. It also led over the 3-year and 5-year periods, delivering strong average returns of 48.3% and 21.1%, respectively.

Hong Kong MPF Performance by LGC Analysis 

There are overall 376 Hong Kong Mandatory Provident Fund (MPF) registered for sale in Hong Kong market with a total 24 Lipper Global Classifications. Among all 24 classifications, Equity Korea, Equity Europe, Equity Asia Pacific ex Japan, Equity Asia Pacific and Equity Global posted 5%, 3.5%, 3.1%, 2.3% and 1.1% on average, separately and took the leading positions among all MPF classifications in December. For the whole year of 2025 period (as of 25/12/31), Equity Korea, Equity Greater China, Equity Asia Pacific, Equity Hong Kong and Equity China posted an outstanding performance with an average return of 84.8%, 33%, 32%, 31.1% and 28%, separately while Money Market HKD only posted positive return of 2.3%.

Figure1：Top/Bottom 10 Hong Kong MPF Performance by Lipper Global Classifications, December 2025

(Click on image to enlarge)

Source：LSEG Lipper, as of 25/12/31, in Hong Kong Dollar

Figure2：Top/Bottom 10 Hong Kong MPF Performance by Lipper Global Classifications, Year-to-Date (as of 25/12/31)

(Click on image to enlarge)

Source：LSEG Lipper, as of 25/12/31, in Hong Kong Dollar

Outlook 

2025 marked Hong Kong’s successful pivot back to growth, underpinned largely by robust global demand for technology hardware, even as challenges persist in revitalizing the local retail economy and managing fiscal transitions.
Despite a sluggish start, economic momentum accelerated throughout the year, prompting the government to revise its full-year GDP growth forecast upward to 3.2% (from an initial 2%–3% range). The narrative of 2025 was defined by a divergence: a global tech upcycle drove exports, while local consumption underwent a structural shift.

Hong Kong capitalized significantly on the global electronics boom. As a critical re-export hub for semiconductors and AI-related components flowing between Mainland China and the global market, merchandise exports recorded double-digit growth of approximately 14% year-on-year.
Conversely, private consumption, while growing, lagged behind GDP. The “Northbound Travel” phenomenon—residents spending weekends in Shenzhen or Zhuhai—solidified into a permanent structural shift rather than a passing trend, dampening growth for local retail and dining. Furthermore, while inbound tourism recovered to near pre-pandemic levels, spending habits evolved from “luxury shopping” to “cultural experiences,” resulting in lower per-capita spending compared to the 2010s.

The property market spent most of 2025 seeking a floor. High interest rates suppressed transaction volumes in the first half of the year; however, following rate cuts in September, activity ticked up in Q4. This halted the slide in residential prices, though a “V-shaped” recovery has yet to materialize.
On the macro front, underlying CPI inflation remained tame at approximately 1.2%, providing a stable cost-of-living environment. The government continued to run a fiscal deficit for the 2025/26 financial year due to infrastructure spending (Northern Metropolis) and softer land sale revenues, though the deficit narrowed compared to 2024.

More By This Author:

S&P 500 Earnings Dashboard 25Q4 - Friday, Jan. 23
Russell 2000 Earnings Dashboard 25Q4 - Thursday, Jan. 22
S&P 500 Earnings Dashboard 25Q4 - Friday, Jan. 16