Market Summary

Yield Movements

Hong Kong, China's local currency (LCY) government bond yield curve exhibited mixed movements between 1 March and 8 May. Yields rose an average of 43 basis points (bps) for bonds with maturities of 2 years or less. For bonds with maturities of 10 years or more, yields fell an average of 14 bps. Yields barely moved between the 3-year and 7-year tenor, falling an average of 4 bps for 3-year and 5-year tenors, and rising less than 1 bp for 7-year bonds.

Size and Composition

Hong Kong, China's LCY bonds outstanding reached HKD1,960 billion at the end of March, up 0.5% q-o-q in Q1 2019 from 1.2% q-o-q in Q4 2018 due to a decline in the government bond segment coupled with marginal growth in the corporate bond segment. On a year-on-year basis, Growth climbed to 3.7% in Q1 2019 from 2.3% in Q4 2018, driven mainly by the corporate bond segment.

Policy, Institutional and Regulatory Developments

In May, the Hong Kong Monetary Authority launched three sets of measures to support and promote Hong Kong, China’s green finance development at the HKMA Green Finance Forum. These measures include (i) green and sustainable banking, (ii) responsible investment and, and (III) a Centre for Green Finance. Green and sustainable banking involves developing a common framework to assess the "greenness baseline" of banks, engaging relevant stakeholders in consultations, and monitoring and evaluating banks' progress in meeting targets.