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Hong Kong’s first retail green bond drops in trading debut, in a lacklustre start for backers of environmentally sustainable investment

  • The three-year note started trading at HK$99.70 per HK$100 bond
  • The bond offers a 2.5 per cent return on a minimum investment of HK$10,000

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The Central waterfront in Hong Kong on 18 August 2021. Photo: Sam Tsang
Cheryl Heng

Hong Kong’s first green bond for retail investors slipped on its first day of trading, a disappointing start for supporters of environmentally sustainable investments following its oversubscription two weeks earlier.

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The three-year note started trading at HK$99.70 per HK$100 bond on Thursday. The bond offers a 2.5 per cent return on a minimum investment of HK$10,000 (US$1,274). Its HK$20 billion offering was touted by Hong Kong’s government to be the biggest retail green bond issuance globally thus far.

It was a hit among retail investors, attracting 493,000 investors to pour HK$32.88 billion (US$4.2 billion) into the offering, translating to an oversubscription rate of 1.2 times on May 6.

“The selling pressure is a bit heavy because there are a lot of short-term players subscribing and selling on the first day, expecting to make 3 to 5 [Hong Kong dollars] on a HK$100 dollar bond,” said Louis Wong Wai-kit, director of Phillip Capital Management.

Finance officials and executives during the 15 February 2022 press conference to launch Hong Kong’s first retail green bond, featuring (L to R) Bank of China’s Deputy General Manager Arnold Chow, HSBC Managing Director Head of Greater China Fixed Income Wong Cheuk, HKMA Deputy Chief Executive Edmond Lau, Financial Secretary Paul Chan Mo-po, Secretary for Financial Services and the Treasury Christopher Hui Ching-yu, Under Secretary for the Environment Tse Chin-wan, and Water Supplies Department Assistant Director/New Works Irene Pang. Photo: Jonathan Wong
Finance officials and executives during the 15 February 2022 press conference to launch Hong Kong’s first retail green bond, featuring (L to R) Bank of China’s Deputy General Manager Arnold Chow, HSBC Managing Director Head of Greater China Fixed Income Wong Cheuk, HKMA Deputy Chief Executive Edmond Lau, Financial Secretary Paul Chan Mo-po, Secretary for Financial Services and the Treasury Christopher Hui Ching-yu, Under Secretary for the Environment Tse Chin-wan, and Water Supplies Department Assistant Director/New Works Irene Pang. Photo: Jonathan Wong

Still, the weak performance is not a major worry for retail investors that can hold until maturity, as “the returns are not bad, [given that it is] principal guaranteed,” Wong said.

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