Eighth iBond gets off to strong debut

Finance | Staff reporter 25 Jun 2021

Hong Kong's new iBond series closed 3.2 percent higher on its market debut, meaning investors would have made a gain of HK$320 for every HK$10,000 invested in the inflation-linked retail bonds.

Turnover was HK$3.24 billion. In comparison, the seventh iBond series closed 2.75 percent higher on its market debut on November 17.

The eighth batch made its debut on the local stock market under the ticker 4246. Dickie Wong, executive director of research at Kingston Securities, said HK$104 is a reasonable level at which investors can consider cashing out in the short term, but given the rising consumer prices in Hong Kong, it will not be a bad choice to hold the bonds until maturity.

The new iBonds attracted HK$53.94 billion from nearly 710,000 investors, both record highs. The overwhelming response came at a time when Hong Kong's economy is seeing green shoots of recovery, with rising consumer prices and falling unemployment figures, while interest rates remain low amid the explosion in money creation by central banks.

There were 709,198 people who subscribed to the eighth series. Around 85 percent, or 605,727, got three board lots, the maximum amount that the government will allot to a subscriber.

The final issue amount was HK$20 billion, making it the largest issuance since 2011.

The seventh batch in November last year ended a four-year gap of issuance.

The eighth series will pay interest once every half-year at a rate linked to inflation, subject to a floor of 2 percent - double the 1 percent guaranteed minimum payment which the government offered five years ago. The bonds carry a tenor of three years and the minimum principal amount was HK$10,000.

The floating interest rate once hit 6.08 percent per annum in the first batch and has never fallen below 1 percent in the following years.

Hong Kong's overall consumer prices rose 1.0 percent in May over the same month a year earlier, after an increase of 0.8 percent in April, according to the Census and Statistics Department.

The seasonally adjusted jobless rate between February and April fell by 0.4 percentage points to 6 percent for the period between March and May, the lowest level since the rate stood at 5.9 percent in the period between March and May last year.

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