Hang Seng Bank launched a mainland China bond fund yesterday for investors eager to profit from the appreciation of the yuan, at a time when interest rates on Hong Kong dollar deposits are near zero.
The city's first mainland bond fund authorised by the Securities and Futures Commission will invest directly in the mainland bond market through a qualified foreign institutional investor scheme.
The bank said the fund will invest mainly in mainland government debt securities, such as government bonds, central bank bonds and policy bank bonds.
The annual yield of mainland government bonds maturing in three to five years ranged from 3.95 per cent to 4.11 per cent on May 21.
Frank Kwong See-wah, chairman of the Hong Kong Capital Market Association, said such products would be attractive because the mainland government bond yield is well above the Hong Kong dollar deposit rate.
He said bond funds, by their nature, were diversified and the credit risk was small if it mainly invested in government bonds.
