Editorial | ‘Silver Bonds’ benefit Hong Kong’s old and new
The ‘win-win’ investment will not only offer Hong Kong’s elderly guaranteed returns but also support infrastructure projects
Elderly residents of Hong Kong looking for low-risk investments have been able to find them in “Silver Bonds”, which were launched in 2016 as a source of stable returns for 2.4 million older investors. At the same time, the city must raise funding for infrastructure projects that can help create jobs and spur economic growth.
For the first time, authorities have chosen to use the proceeds from the Silver Bonds to fund those critical projects through the city’s infrastructure bond framework in a welcome move that creates a “win-win” scenario for the public, older investors and society as a whole.
Hong Kong has issued eight previous rounds of Silver Bonds targeting investors aged 60 and above. Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said the proceeds from the sale would support financing for the Central Kowloon Route, the Hung Shui Kiu development in Yuen Long, and drainage improvement works in Wong Tai Sin.
The latest batch of Silver Bonds “will support infrastructure projects for the good of the economy and people’s livelihood”, Financial Secretary Paul Chan Mo-po said. They would also “provide our citizens with a ‘sense of participation’ and a ‘sense of gain’ in support of Hong Kong’s long-term development projects”.
The ninth round of Silver Bonds will be issued at a lower coupon than the 5 per cent in August last year because the US Federal Reserve is expected to cut interest rates tomorrow. But the three-year bonds still offer a guaranteed 4 per cent coupon, and should help the elderly keep up with inflation, which stood at 2.5 per cent in July, fed by higher costs of housing, transport, electricity and goods and services. Bonds are less risky than stocks as they offer a stable return, and the offerings conducted by the Hong Kong Monetary Authority on behalf of the government have proved popular.
Stability is key for the city’s retirees, three-quarters of whom believe they will have to continue working after their expected retirement age of 60 to 65. If bonds can provide stable returns while also helping support society’s development and economic growth, they can better serve the greater good.
