Editorial | Banking on ‘silver bonds’ is not enough
- While such investments are almost risk-free and offer a relatively high rate of return, it does little to tackle the core issue of a decent retirement income for Hong Kong’s rapidly ageing population
Uncertainty can make people cautious about investing. A telling exception is to be found in the unprecedented subscription by Hong Kong’s over-sixties in the latest issue of so-called silver bonds.
The Hong Kong Monetary Authority says the eighth round of the low-risk, inflation-linked government debt targeted at senior savers has attracted the highest response to date.
The 326,000 subscription applications are worth around HK$72.18 billion, or about 1.4 times the target issuance. Due to the demand it is expected that the final issue size will be increased from HK$50 billion to the upper limit of HK$55 billion. The HKMA will announce the final allotment on Wednesday.
An HSBC spokesman noted that 30 per cent of its subscribers to the silver bonds were first-timers, and about half used mobile and internet banking. “With mobile banking becoming increasingly popular among elderly customers, mobile application [use] increased 50 per cent [since the last silver bond issuance in August 2022,” she said. Bank of China (Hong Kong) reported a similar experience.
The higher take-up reflects the attraction of the combination of higher interest rates and low risk at a time of struggling stock markets. But there is more to it than market uncertainty.
A guaranteed annual coupon of 5 per cent versus 4 per cent in the previous sale underlines the rising cost of living in Hong Kong, already ranked one of the world’s most expensive cities.