25 October 2016
John Tsang (left) will deliver his budget speech Wednesday.Photo:
John Tsang (left) will deliver his budget speech Wednesday.Photo:

Govt plans to launch iBonds targeting elderly

The government is planning to sell iBonds — which are aimed at protecting against inflation – to Hongkongers aged 65 and over, with a guaranteed return of 2 percent, the Hong Kong Economic Journal reported Monday. 

Between HK$2 billion (US$260 million) and HK$5 billion of such iBonds, the yield of which is linked to the rate of inflation, will be sold to the elderly.

The plan will be unveiled Wednesday when Financial Secretary John Tsang Chun-wah delivers his budget for 2016/17, the report said, citing unnamed sources.

The government has been issuing HK$10 billion of inflation-linked iBonds each year to Hong Kong residents since 2011.

Investors in the iBonds for the elderly will have to resell the bonds to the Hong Kong Monetary Authority if they want to cash out instead of holding them until maturity. No secondary market will be provided.

In mid-2014, Hong Kong had 1.07 million people aged 65 or above, representing 14.7 percent of the total population. 

Observers are urging the government to set an upper limit on the subscription amount for the special iBonds to ensure that elderly Hongkongers without much wealth have an opportunity to buy them.

The government intends not to limit the subscription amount but to ensure that every applicant will be allotted at least one round lot (HK$10,000) of these iBonds, the report said.

But observers believe that will not help many elderly people in need, as an annual yield of 2 percent on one lot works out to only HK$200.

[Chinese version中文版]

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