Hong Kong's Exchange Fund saw its investment gains reach a record high of HK$331 billion in 2025, as a bull run in the stock market as well as interest rate cuts helped boost the city's financial war chest used to defend the local currency.

The gains were 51 percent higher compared with the HK$218.8 billion recorded in 2024.

It came as the global financial market stabilised in the second half of last year, after the impact from US tariffs was smaller than expected, while a global rally in artificial intelligence also drove up capital flows.

"Overall, 2025 was an exceptional year, where every major component of the Exchange Fund achieved positive returns, contributing to a record high investment income," Eddie Yue, chief executive of Hong Kong Monetary Authority (HKMA), told reporters at a press briefing on Wednesday.

"This is uncommon and has occurred only twice over the past 15 years, in only 2017 and 2020," Yue added.

He noted that the annual investment return rate stood at eight percent for last year, and that the investment portfolio achieved a real return of 12.4 percent.

But he warned about the outlook in 2026, saying factors that shaped the strong performance of 2025 might not repeat themselves this year.

"Factors such as global economic conditions, monetary policies of major central banks, developments in AI, and geopolitical conflicts could all affect market performance," he said.

"And if market conditions deteriorate, we may see significant market fluctuations."

He said the HKMA would adhere to its principle of "capital preservation first while maintaining long-term growth" in light of the "complex and volatile investment" landscape.

By categories, the fund's total stock investment income for the entire year of 2025 stood at HK$108 billion, with gains from local equities totalling almost HK$34 billion and that from overseas stocks standing at HK$74.1 billion.

Bond investment income stood at HK$142.2 billion, while the valuation of non-Hong Kong dollar assets rose by HK$38.4 billion.

By the end of September last year, the long-term growth portfolio saw investment income rise to HK$42.4 billion.