Monetary Authority Chief Executive Joseph Yam has called for investor caution in the year ahead despite 2007's good Exchange Fund results.

In his weekly Viewpoint column published today Mr Yam said global markets are unsettled with many fearing a recession in the world's largest economy as the US sub-prime crisis and its ramifications elsewhere have still not fully played out.

"The turbulence we have seen in the latter part of 2007 and so far in 2008 appears set to continue for at least a while. Everyone will need to manage their risks carefully in the months ahead," he said.

Experience last year also underlined how global markets' increased inter-connectedness coupled with the complexity of some new financial products can transmit risks rapidly from one market to another, sometimes catching participants and policy makers by surprise.

While the Exchange Fund's investment income of $142.2 billion last year was the highest on record in absolute terms, investment is not the Exchange Fund's primary purpose, he said. As laid down in law, the purposes are backing the Hong Kong dollar and maintaining the stability and integrity of Hong Kong's monetary and financial systems.