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The Hong Kong government has very comprehensive laws and regulations on local bonds, focusing on protecting investors. The regulation on public offerings of bonds

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The Hong Kong government has very comprehensive laws and regulations on local bonds, focusing on protecting investors. The regulation on public offerings of bonds is very strict and needs to be reviewed by multiple independent departments such as the Stock Exchange and the Listing Committee, which ensures the stability of the Hong Kong bond market and wins the confidence of investors. Hong Kong Government Bond Markets The bonds issued by the Hong Kong government mainly fall into three categories, including the Exchange Fund Bills and Notes Programme, the Government Bond Program and the Government Green Bond Programme. First of all, Exchange Fund Bills and Notes are Hong Kong dollar debt securities issued by the HKMA. This program ensures that there are a large number of high-quality Hong Kong dollar bonds in the market for investment and as a tool for asset management. In addition, in order to develop the local bond market in Hong Kong, the government has launched a government Bond Program in 2009, hoping to ensure a stable and continuous supply of government bonds in the market to meet the needs of retail investors and broaden the Hong Kong dollar bond base, thereby promoting the progress and sustainable development of the local bond market. Last but not least, in order to promote green finance, the government launched a green bond scheme to provide funds for the government's green projects, hoping to show the government's support for sustainable development, provide reference indicators for relevant green bonds in the market, and promote Hong Kong's international image in developing green finance. Hong Kong Corporate Bond Markets In Hong Kong's fixed income market, government bonds account for a very large proportion. accounting for more than half of the market. However, in the category of non-govemment bonds, authorized institutions, local enterprises, statutory bodies and overseas issuers also account for more than 40% of the market. In Figure 1, we can see the proportion of public bonds and non-public bonds in 2019. In the past few years, the issuance of Hong Kong dollar bonds has maintained a steady development, and the issuance in 2021 is approximately HK$4.3 trillion. Among them, as shown in Figure 2, foreign issuers other than authorized institutions and multilateral development banks are the most active issuer category, accounting for about 84% of issuance in 2021. Fig 2: Hong Kong dollar bond new issuance in Hong Kong by issuer category? Figure 2 Hong Kong dollar bond new issuance in Hong Kong by issuer category HKD billion 3,500 HKD billion 3,000 2,500 2,000 1,500 1,000 500 2017 2018 1,000 900 800 700 600 500 400 300 200 100 0 2019 2020 2021 Statutory Bodies and Government Owned Companies Exchange Fund (left scale) Foreign issuers other than multilateral development banks Local Company Multilateral Development Bank Accreditation body Government At the same time, issuance by local companies recorded an encouraging rise, growing by more than 67% year-on-year, reflecting the financing needs of local companies in Hong Kong and investor confidence in the credit scores of local companies. https://www.hkma.gov.hk/media/chi/publications-and-research/quarterly-bulletin/qb202203/fa1.pdf Introduction The fixed income market is often referred to as the bond market. It includes bond securities issued by governments and companies, and is one of the indispensable areas in the investment world. This type of investment is considered more stable than stocks, more protective of capital, and can provide regular income. In this report, our team will study and compare the development and performance of the Hong Kong and U.S. fixed income markets, and thereby discuss the unique features and future opportunities of the Hong Kong fixed income market. Hong Kong Fixed-income Markets Overview As the fourth largest fixed income market in Asia, Hong Kong's bond market is undoubtedly an important part of Hong Kong's financial market. As of the end of 2019 and shown in Figure 1, the total outstanding Hong Kong dollar bonds amounted to HK$2,166 billion. Fig 1: Hong Kong dollar bond new issuance in Hong Kong by issuer category Figure 1 - Outstanding HKD bonds in Hong Kong by type of issuers (as at end-December 2019) Exchange Fund 50% Non-public segment 45% Government 5% Total: HK$2,166 billion MDB 1% Local corporates 5% Authorized nstitutions 15% Non-VDS overseas issuers 2.1% Statuary bodies and government-awred corporations 3% According to the Hong Kong government, a well-developed bond market will help Hong Kong to allocate funds more effectively, thereby ensuring Hong Kong's financial stability and promoting economic development, and consolidating Hong Kong's status as an international financial center. In view of this, Hong Kong launched a government bond scheme in 2009, which was widely welcomed by the market and promoted the development of Hong Kong's local bond market. 'https://www.legco.gov.hk/research-publications/chinese/2021fs01-bond-markets-in-hong-kong-and-si ngapore-20210128-c.pdf

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