Hong Kong's HK$50 billion Silver Bonds attract senior citizens amid rate-cut expectations

Core Insights - There is a significant increase in interest for the latest batch of Silver Bonds in Hong Kong compared to last year, with higher application volumes and values reported by major banks [1][4] - The Hong Kong government's Silver Bonds issue amounts to HK$50 billion (approximately US$6.4 billion) with a three-year tenor and a minimum interest rate of 3.85 percent, which is attractive compared to current bank deposit rates [3][4][5] - The Silver Bonds are specifically designed for senior citizens aged 60 and above, providing them with a secure investment option to cope with rising living costs [6] Subscription Trends - HSBC noted that around 30 percent of applicants for Silver Bonds are new investors, indicating a growing interest in the program [1] - ICBC (Asia) reported that approximately 75 percent of subscriptions were made through online channels, with an average subscription of over 30 lots per customer, reflecting a 20 percent increase from last year [4] - Futu Securities also observed a rise in customer inquiries at its branches, suggesting heightened interest in the Silver Bonds [2] Market Context - The anticipated rate-cutting cycle by the US Federal Reserve and expected declines in Hong Kong interest rates make Silver Bonds an appealing low-risk investment option for senior investors [3] - The return on Silver Bonds is significantly higher than the current interest rate of around 2 percent for 12-month HK dollar time deposits, which is expected to attract between 300,000 to 350,000 senior citizens to subscribe [5]