The Hong Kong Special Administrative Region government announced plans on Tuesday to launch a new batch of silver bonds, as the city continues its efforts to provide “safe, reliable, low-risk” investment options to meet the financial demands of its growing, aging population.
With each unit offered at HK$10,000 ($1,282), the target issuance size for the upcoming silver bonds is HK$50 billion. The offering size could be scaled up to HK$55 billion depending on market conditions, the SAR government said. A maximum allocation quota of HK$ 1 million is set for each investor.
The ninth batch of silver bonds will have a tenor of three years and holders will be paid interest once every six months at a rate linked to inflation in Hong Kong, with a minimum of 4 percent, lower than last year’s 5 percent.
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Hong Kong residents aged 60 or above will be eligible for the subscription.
“The HKSAR government continues to issue silver bonds this year to provide a safe, reliable and low-risk investment option with steady returns for senior citizens, while driving the financial industry to tap into the immense potential of the silver market,” said Financial Secretary Paul Chan Mo-po.
By supporting infrastructure projects under the Infrastructure Bond Program, the bonds will provide citizens with a “sense of participation” and a “sense of gain” during the city’s long-term development, he said.
The subscription period will be from 9 am on Sept 30 until 2 pm on Oct 14, with the bonds to be issued on Oct 23.
Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said the annual issuance size of the bonds would depend on the market. He expressed confidence that with stable and guaranteed returns, the latest batch of silver bonds would be attractive.
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Last year, more than 320,000 elderly citizens subscribed to the silver bonds.
The latest issuance comes as Hong Kong is striving to cope with an aging problem. According to the Census and Statistics Department, the number of elderly people in Hong Kong is expected to increase from 1.45 million in 2021 to 2.74 million in 2046, representing a rise from 20.5 percent of its population to 36 percent.
Wong Tsz-cheuk, head of Greater China FX Cash and EM rates trading at HSBC, said bonds are a more attractive investment option than other types of assets as the United States’ Federal Reserve is expected to cut interest rates this month. He expects the US central bank to do so three to four times this year, lowering rates by up to 1 percent.
Contact the writer at thor_wu@chinadailyhk.com
