The Exchange Fund posted an investment loss of HK$5.5 billion in the three months ending in September, bringing a halt to the winning streak in the first two quarters of the year.
The Hong Kong Monetary Authority (HKMA) said the fund, which is used to back the local currency, earned HK$15.7 billion from bond investments.
But there were losses of HK$13.7 billion from equities and HK$7.5 billion from foreign exchange investments.
Taking the first three quarters together, the fund logged a gain of HK$110.9 billion.
HKMA chief executive Eddie Yue blamed uncertainties in the external environment and escalating geopolitical tensions for the third-quarter slump.
“The main area that we should monitor is whether US inflation, especially service inflation, will come down to the level of the inflation target, which is 2 percent set by the Federal Reserve,” said Yue.
“For the next one and a half months, plus the first half of next year, much will depend on what data will come out in the market, which will lead to different interpretations of where the interest rate path will go, and that will affect market sentiment.”