Date
19 October 2017
BOC Hong Kong's Gary Leung predicts fewer iBond investors will be willing to cash out this year. Photo: HKEJ
BOC Hong Kong's Gary Leung predicts fewer iBond investors will be willing to cash out this year. Photo: HKEJ

Tame inflation likely to suppress iBond5 gains

The fifth batch of the government’s inflation-linked bonds, better known as iBond5 (04228.HK), is likely to see a weaker price growth than the previous edition because of Hong Kong’s tame inflation, estimated at only 3 percent this year.

Gary Leung Wai-kei, global market deputy general manager at BOC Hong Kong (Holdings) Ltd. (02388.HK), estimates that iBond5, a type of low-risk, counter-inflation bond sold by the government, will close at a range of HK$103 to HK$105 per unit on its first trading day, the Hong Kong Economic Journal reported Wednesday.

Thus, fewer investors will be willing to cash out and take profit this year, Leung said.

The fourth batch of iBond closed at HK$105.15 on the first trading day last year, up 5.15 percent from its issue price, generating a gain of HK$515 for each board lot.

The subscription size of iBond5 surged 42 percent in value compared with that of iBond4 on the first day of application, with each investor seeking to buy an average of six lots at BOC Hong Kong.

Based on the current pace of applications, the number of iBond5 subscribers may surpass 500,000 by the end of subscription period next Wednesday, Leung said.

CITIC Bank International Ltd., Industrial and Commercial Bank of China (Asia) Ltd., The Bank of Communications Hong Kong Branch, Dah Sing Banking Group Ltd. (02356.HK), China Construction Bank (Asia) Corp. Ltd., and Fubon Bank (Hong Kong) Ltd. also observed strong investor response to iBond5.

[Chinese version中文版]

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