The US$320 billion Hong Kong dollar bond market looks rather anemic as issuances by the government make up ten times that of the rest of the market, but there are still investors who see the value of investing in that market. In an investor survey conducted by Asset Benchmark Research, 44% of respondents say they participate in the Hong Kong dollar bond market for its low volatility and another 13% invest in Hong Kong dollar bonds as part of a carry trade. Only 9% say they see Hong Kong dollar bonds as a proxy for China. 
The Asset quoted Binay Chandgothia, a fund manager with Principal Global Investors, as saying:
“You have a situation where the government in Hong Kong has a surplus so they don’t need to borrow a lot of money. That ensures that there’s not a lot of pressure on the yield curve for the government side of things…. There does not tend to be a prolonged sell-off. Even when sell-offs happen, they happen for a short period.”
And:
“With Hong Kong dollar bonds, you don’t get very long-duration bonds. Most of the time, issuance tends to be five to 10 years. In the US, you actually get a much longer yield curve going out to 30 years. Even the Hong Kong government does not issue bonds that are longer than 15 years. Buying one is a struggle; the supply is tight.”
Chandgothia also said that since Hong Kong is a net-savers market, there is always a lot of demand for long-term savings products from insurance companies, banks and asset managers.
To read the whole article, Hong Kong dollar bonds struggle to find a meaning, go to the website of The Asset. In addition, check out our Bond ETFs list and our Hong Kong ETFs list.
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