THE meltdown in bond prices this year continued to exact a toll on Hong Kong, where the Wardley Hong Kong Bond Index marked its first anniversary down nine percentage points on its starting level.
The index stood at $97.83 - it had a value of $100 when it was launched on December 1, 1993, the bank said.
But HSBC Markets said the latest figure included re-investment value of accrued interest and the fall was greater than the 2.17 per cent indicated by the November figure.
'The actual net fall of the component bonds' price is 900 basis points (nine percentage points],' a spokesman for HSBC Markets said.
'So basically the capital price of the component bonds fell by nine per cent through the year.' The decline was recorded as official interest rates in the United States and Hong Kong were increased by 0.75 percentage points, and the outlook for short-and medium-term rates remained negative.
'As the duration of the Hong Kong dollar fixed-income portfolio is shorter than that of US dollar denominations, the negative impact of the hikes in short-term rates is amplified,' it said.