The Hong Kong Investment Funds Association has raised managers’ concerns to the Mandatory Provident Fund Schemes Authority and the Financial Services and the Treasury Bureau, said the people, asking not to be named because the information is private. The association recommended that authorities make an exception for US Treasuries, by allowing funds to invest in the assets even if they are rated one notch below AAA, the people said.
Hong Kong’s pension fund managers have flagged the risk of potential forced selling on their Treasury holdings after a downgrade by Moody’s Ratings of US debt, according to people familiar with the matter.
Funds operating under the city’s HK$1.3 trillion ($215.12 billion) Mandatory Provident Fund system are only allowed to invest over 10% of their assets in Treasuries if the US has a AAA or equivalent rating from an approved agency. After last week’s cut by Moody’s, the only remaining such score is from Japan’s Rating & Investment Information Inc.
