The Exchange Fund earned HK$97.9 billion from its investments in the first quarter of this year, marking its second consecutive gain, the Hong Kong Monetary Authority (HKMA) said on Monday.

The HKMA told a Legco panel that the income came from stocks, bonds, and foreign exchange investments and made up for half of the losses in 2022.

The fund, which is used to back the Hong Kong dollar, earned HK$3.3 billion from local stocks and HK$25.5 billion from overseas stocks.

The gain from bonds was HK$43.9 billion, up more than 72 percent quarter-on-quarter.

Foreign exchange investments meanwhile gained HK$25.2 billion - 84 percent up from a year ago.

The HKMA's chief executive, Eddie Yue, said while the latest figures are a sign of optimism, the external environment is expected to remain uncertain.

"Going forward, it is actually quite difficult to see where the performance will go, because the inflation situation in the US remains quite uncertain," he told reporters after attending the panel meeting.

"Will there be a need for the Fed to keep the US rates at the current rate for a longer time, instead of really reducing them as the market hopes or has expected, and whether this disconnection between the Fed projections and market expectations will lead to further volatility in the financial markets, is something that we need to watch."

Yue also warned that a recent series of US banking failures could have "ripple effects" on the Hong Kong economy.