The Hong Kong Monetary Authority (HKMA) on Monday said its Exchange Fund posted an investment gain of HK$54.3 billion in the first quarter of this year, despite the underwhelming performance of local stock markets.

It was the second consecutive quarter of gains for the fund, whose primary role is to back the Hong Kong dollar.

During a panel meeting in the Legislative Council, the HKMA revealed that the fund lost HK$2.3 billion in local equities in the first quarter and lost HK$4.8 billion on its foreign exchange assets.

However, these were offset by gains of HK$25.1 billion from bond investments and HK$36.3 billion from other stocks.

Speaking to reporters after the meeting, HKMA chief executive Eddie Yue said the future performance of the fund remains uncertain.

“The uncertainty about the US interest rate path, which will depend on the path of inflation in the US... we will still need to see the incoming economic data and see where the inflation path in the US will go, and see whether they will, as the market is expecting now, defer the rate cut decision and also the pace may be a little slower than expected before,” he explained.

Yue also said tensions in the Middle East and the pace of economic recovery in mainland China contribute additional uncertainty to the performance of the Exchange Fund.