Hong Kong Financial Secretary Paul Chan Mo-po gives a speech at the “Business Plenary: Collaborate for a Bright New Era” section on Aug 31, 2022. (ANDY CHONG / CHINA DAILY)
Issuance amount of Silver Bonds gradually increased from HK$3 billion ($382 million) to HK$45 billion since it was first launched in 2016, reflecting older adults’ growing recognition of the securities as “a safe and reliable investment option with steady returns”, Financial Secretary Paul Chan Mo-po said in his blog on Sunday.
Chan added that the expansion of the Silver Bond’s offering size is “in line with the government’s efforts to promote financial inclusion”.
According to the official subscription and allocation results of the latest batch of Silver Bonds, the Treasury received 289,640 valid applications for subscribing about HK$62.5 billion in principal amounts. About 65 percent of the applicants are aged 60 to 69, while 30 percent are 70 and older.
According to the official subscription and allocation results of the latest batch of Silver Bonds, the Treasury received 289,640 valid applications for subscribing about HK$62.5 billion in principal amounts. About 65 percent of the applicants are aged 60 to 69, while 30 percent are 70 and older
To meet the excess demand of the older adults and enable them to share in and benefit from the development of Hong Kong’s financial market, the government thus boosted the issuance amount to a record HK$45 billion, 50 percent larger than last year’s offering size, Chan said.
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This batch of Silver Bonds will pay a guaranteed interest rate of at least 4 percent annually, up from 2 percent since the government began selling the securities. Chan said this shows how this variable target is pegged to the peripheral interest rate and inflation rate to ensure that Silver Bonds can really benefit older adults.
The finance chief emphasized that the rise of inflation-protected bonds’ guaranteed interest rate will not affect the soundness and sustainability of the bond fund, which is not part of the fiscal reserves and is treated separately from the government’s other accounts.
“As Hong Kong is a small, open economy with the free flow of capital and a stable exchange rate, we must strictly adhere to fiscal discipline — we will not issue bonds to cover the government’s recurrent expenditures,” Chan said.
Also in his blog, Chan said that the market is widely expecting the US Federal Reserve to raise interest rates again two weeks from now, which will lead to an increase in Hong Kong’s local interest rates and put pressure on borrowers and businesses.
READ MORE: Chan: HK economy moves forward despite inflation
However, Chan said he hopes that another round of electronic consumption vouchers to be distributed on Oct 1 will inject around HK$15 billion of consumption power into the local market, offering support to the retail and catering sectors.
