HSBC Holdings said bond sales to individual investors doubled in the first four months of the year, indicating increasing demand for quality paper. Peter Wong Tung-shun, an executive director at HSBC Asia-Pacific, expected the proposed Hong Kong government bond would be well received by investors when it was launched in the coming months. The government plans to issue up to HK$100 billion in bonds in the next five to 10 years, with about HK$10 billion to HK$20 billion over the course of a year, to spur the local bond market. It hoped that the first bonds could be launched in the third quarter of the year if related measures are approved by the Legislative Council. Mr Wong said the government's initiative would help deepen the local bond market and strengthen Hong Kong's status as an international financial centre. As the government plans to issue bonds in a consistent manner, that would build up a yield curve and financial institutions can launch other financial products based on that. However, he said the bond issue of about HK$10 billion a year was too small. 'It should let market demand determine the size,' he said. Anita Fung Yuen-mei, the bank's treasurer and head of global markets, said demand from institutional and retail investors for bonds had increased substantially in recent months. She added that investors were looking for high-quality products with a steady return after the global financial turmoil. She also expected the planned government bond would be easily absorbed by the market as Hong Kong dollar deposits amounted to HK$3 trillion and there was demand from institutional investors. There is some concern that the bond programme might not boost liquidity in the secondary market since investors, particularly retail investors, tend to hold the bonds till maturity. Ms Fung said the secondary market was not liquid enough as many Hong Kong investors were medium-term investors. What was needed was channels in place where investors could buy or sell bonds whenever they wanted. She expected there would be adequate channels and mechanism for trading of government bonds in the secondary market after it was launched.