Why is Hong Kong obsessed with commemorative banknotes?

August 22, 2017 14:11
Bank of China Hong Kong will offer three types of notes in September to celebrate its 100th anniversary. Photo: Bloomberg

It has become almost like a knee-jerk reaction for note-issuing banks to print money to celebrate their anniversary or any special occasion. They never get tired of it because it almost always works.

Standard Chartered celebrated its one and half centuries of existence with special commemorative bills in 2009, and HSBC, not to be outdone, also came up with 150th anniversary notes in 2015.

Now comes Bank of China Hong Kong, which will issue 100th anniversary notes next month to mark its centennial.

The announcement is sure to trigger a treasure hunt of sorts among residents of this money-obsessed city, who are also crazy about collecting souvenirs, knick-knacks and 7-Eleven freebies because of their resale value, if not for anything else.

Come to think of it, there's really nothing wrong about a state-owned bank taking advantage of its money-printing privilege to promote itself.

This is the third time for Bank of China's overseas arm, the city's second-largest commercial bank, to issue commemorative notes.

In 2008, Bank of China issued special bills in Hong Kong, Macau and mainland China to celebrate Beijing's hosting of the world's biggest sports event, the Summer Olympiad.

Four years later, it issued commemorative notes to celebrate its 100th anniversary, causing a mad scramble among investors, collectors, speculators and almost everyone else.

This year, Bank of China Hong Kong will offer three types of notes (single notes, three-in-one uncut notes and 30-in-one uncut notes) in September to mark its establishment 100 years ago.

Only this time, the number of notes to be issued will be a record high – substantially more than the two million HSBC issued two years ago.

But much like an initial public offering, no one is sure if the supply will meet the demand.

And the same thing holds true for the value of the notes. Although the special notes that Bank of China issued in the two previous occasions always managed to stay above the issue price, other commemorative notes were not as lucky.

A commemorative notes trader told Apple Daily that HSBC's 35-in-one uncut anniversary notes went up by 76 percent on debut but have since lost nearly half of their value to around HK$12,000.

It is said that these notes cost around HK$5,250, and the difference between the cost and the offer price usually went to charity.

One reason for the poor reception of the HSBC notes is, surprisingly, its neat package. According to the trader, the notes came in a box set, which makes them extremely difficult to move to China for resale.

In other words, save speculators all the trouble by giving them A4-sized notes wrapped in old newspapers which they can easily take across the border.

Would Bank of China Hong Kong consider printing user-friendly anniversary notes for the sake of these hard-working speculators? Tough call.

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EJ Insight writer