The Hong Kong Monetary Authority (HKMA) on Monday said income from the exchange fund fell by 3.1 percent in 2024 to HK$219 billion.

For the whole year, income from bond investments dropped 6.3 percent year-on-year to HK$135.6 billion, while income from non-local equity investments declined 6.7 percent to HK$68.7 billion.

The foreign exchange valuation of non-Hong Kong dollar assets also fell by HK$35.6 billion.

However, income from local equity investments gained HK$21.8 billion, while returns on other investments stood at HK$28.5 billion.

In 2023, the fund used to defend the Hong Kong dollar saw a HK$226 billion gain, its best ever result.

HKMA chief executive Eddie Yue said the fourth-quarter loss last year was due to increased volatility in the global markets following geopolitical risks, as well as increasing concerns over inflation.

The strong US dollar also weighed on other major currencies during the period.

Yue said further challenges lie ahead.

"The new US administration's policies on the economy, tax and trade could add uncertainties to the inflation path, and that, in turn, affects how much room the Fed has for adjusting monetary policy," he said.

"[And] any escalation in trade frictions among major economies or geopolitical situation could impact real economic activities, and may also trigger volatility in the financial markets."