1. Evaluate the latest development of bond market in Hong Kong
The Hong Kong dollar debt market grew steadily despite the volatility in global bond markets.
Firstly, Hong Kong is quite a liberal debt market. According to CbondS, International investors are free to invest in debt instruments issued in Hong Kong. There are no restrictions on foreign borrowers tapping the domestic debt market to finance their business.
The bond market in Hong Kong has for some time been a significant market place for issuers and investors, in both domestic and foreign currencies. The range of product offerings, the open access for issuers and investors, both domestic and international, and the increasing significance of offshore RMB bond issuances make Hong Kong one of the most frequented international bond markets in Asia.
Secondly, amid uncertainties over the course of the Fed’s QE tapering and its potential impact on emerging markets, bond fund outflows and a surge in the yields of Exchange Fund Bills and Notes. In this situation, the public sector was the main driver of growth for the domestic debt market, issuing HK$274.5 billion or 14.5% more debt than the previous year.
New debt issued by the local private sector, which comprises AIs and local corporations, declined considerably. As the increase in public sector debt issuance more than offset the decline in new debt issued by the local private sector, total issuance in 2013 grew by 10.6% year on year to HK$2,356.8 billion.
The offshore renminbi debt market in Hong Kong also expanded tremendously in 2013. Apart from the strong growth and issuer mix, the market also saw two other positive developments, namely, the issuance of the first floating-rate bond priced with reference to the CNH...
... middle of paper ...
...gov.hk/
Mandatory Provident Fund Schemes Authority: http://cplatform.mpfa.org.hk/MPFA/english/index.jsp
http://www.hsbc.com.hk/1/2/broking/about-us?pwscmd=cmd_init http://www.hsbc.com.hk/1/2/about/home http://www.hsbc.com/careers
https://www.hsbc.com.hk/1/2/chinese/hk/investments/bonds/tools/benefits https://www.ukbondnetwork.com/investors/benefits-of-investing https://www.hsbc.com.hk/1/2/hk/investments/faq#internalLink21 http://www.rlrouse.com/bonds.html http://www.wikihow.com/Invest-in-Bonds http://www.hsbcnet.com/gbm/about-us/news/2012/renmibi-sovereign-bond-insurance-hong-kong.html http://www.investmenteurope.net/investment-europe/opinion/2244849/alternatives-set-to-gain-as-bond-markets-are-challenged-says-hsbc-pbs-willem-sels
http://www.hsbc.ae/1/PA_ES_Content_Mgmt/content/uae_pws/pdf/en/rmb-campaign-brochure.pdf
http://em.cbonds.com/countries/Hong-kong-bond
Also, the usage of high yield bonds securities for financing became popular during the 1990s in foreign markets such as Latin America, Asia, and Europe showing the rise in international appeal for these kinds of securities. However, outside of the U.S the high yield market has taken a longer time to become popular and thus there is still room for the development of high yield bonds within financial markets in emerging countries. It is safe to determine that the market for high-yield bonds will always be in existence since it is a viable alternative for many fast growing firms to acquire financing and is a rewarding option for investors. The key to the still growing, strong market demand for high yield bonds is based on linking the [U.S.] economy’s constant desire for capital with investors’ desire for higher returns on their investment.
The consistent high spending of capital equipment is the first reason why one would recommend reducing the debt to equity ratio. A company with higher levels of debt is less flexible in being able to adjust to new market demands and conditions that require the company to make new products or respond to competition. Looking at the pecking order of financing, issuing new shares to fund capital investing is the last resort and a company that has high levels of debt, must move to the equity side to avoid the risk of bankruptcy. Defaulting on loans occur when increased costs or bad economic conditions lead the firm to have lower net income than the payments on loans. The risk of defaulting on loans and the direct and indirect cost related to defaulting lead firms to prefer lower levels of debt. The financial distress caused by additional leverage can lead to lower cash flows available to all investors, lower than if the firm was financed by equity only. Additionally, the high debt ratio that Du Pont incurred also led to them dropping from a AAA bond rating to a AA bond Rating. Although the likelihood of not being able to acquire loans would be minimal, there are increased interest costs with having a lower bond rating. The lower bond rating signals to investors that the firm is more likely to default than if it had a higher (AAA) bond rating.
We recommend the management of Walt Disney to ACCEPT the Goldman’s Solution to create10-year ECU Euro bonds with sinking fund and swap with the French utility since this indirect Yen financing has smaller XIRR that means it would be lower borrowing cost than a similar 10 year Yen term loan.
To balance the trade deficit, U.S. has been borrowing money from other countries including its biggest trade partner: China. It is possible to borrow money from many other countries especially when such country like U.S. have other countries trust. However, it is not the same as how it used to be in the past. As a result, U.S. cre...
Public debt, which comes from securities and bonds issued by the United States Treasury, is responsible for over 60 percent of the debt (“Debt Position and Activity Report” 1). These debts are being held by the public inside and outside the US. Over 25 percent of the debts are held by foreign governments, in which China and Japan accounts for almost half of the sum (“Treasury Bulletin: September 2009” 60).
Morrison, Wayne M., and Marc Labonte. "China's Holdings of U.S. Securities: Implications for the U.S. Economy." Federation of American Scientists. Federation of American Scientists, n.d. Web. 13 Jan. 2014.
Despite the fact that recent reports have shown that the Chinese currency is currently facing descending pressures, it is, however, likely to improve in the future because of the enhanced terms of trade, current account surplus that is growing, and high net saving. Another reason that will make the Chinese RMB to do well in the future it is because the currency has solid fundamentals and the economy of the country is significantly increasing at a higher rate than the GDP rates. Due to the growing Chinese economy to being the second largest economy, the Chinese currency yuan has been acknowledged by the International Monetary Fund (IMF) as a major global
Xingzhong, LI Daokui David YIN. "The International Monetary System in the Era of Post-Financial Crisis: What Policy Options Does China Have?[J]." Journal of Financial Research 2 (2010): 005
Policy makers from US and all over the world have argued that the Yuan is highly undervalued by around 40% (Morrison and Labonte 2008, p.2). This statement is further supported by China’s foreign reserves exceeding $3 Trillion, which indicates the government’s intervention in keeping th...
Lucey, B. and Steeley, J. (2006). Measuring and assessing the effects and extent of international bond market integration. Journal of International Financial Markets, Institutions and Money, 16(1), pp.1--3.
Howells, Peter., Bain, Keith 2000, Financial Markets and Institutions, 3rd edn, Henry King Ltd., Great Britain.
Historically, the Malaysia Government Bond 10Y reached an all time high of 5.35 in April of 2004 and record low of 2.87 in January of 2009. Thus, the bond market in Malaysia are normally fluctuate, the risk taken by the bondholders could be minimized by getting ready homework about the bonds which are going to buy with. Bonds can be a great instrument to generate income and widely considered to be a safe investment, especially compared to equity securities such as stocks. However, However, investors need to be aware of some potential traps and risks to holding corporate and/or government bonds. Let us expose the bonds potential risks. Firstly is the inflation risk. When an investor buys a bond, he or she crucially commits receiving a rate of return, either fixed or flexible, for the period of the bond or at least as long as it is held. But what happens if the cost of living and inflation increase dramatically, and at a quicker rate than income investment? When that happens, investors will see their purchasing power corrode and may actually achieve a negative rate of return (because of factoring in
If the development of Financial Market in America is like a sturdy adult, I would say the development of Financial Market in China is just like a child. The history of the U.S. financial market was established and has been growing over two centuries. For China, only twenty year has now passed since the financial market was built and growth. The Chinese financial market seems to be immature compared to the U.S. For example, China’s financial market does not have a thorough monitored stock market. The child is just starting to imitate the behavior and follow the step of the adult. However, the child is too young that mistakes always being made. On the other hand, since the child is in his early growth stage, a high level of growth is undertaking and a large progress might be attained. In today's China’s financial market, it is necessary for China to gather finance professionals in development of financial market. As a recent graduate student, working in the finance field less than a year, it is extremely hard for me in making a tiny positive effect on the growth of Chinese financial. However, to be engaged myself to the development of Chinese financial market is my long-term career goal.
Debt crisis is becoming common and faced by most citizens in Malaysia. Between June 1997 and January 1998 a financial crisis swept like a brush fire through the "tiger economies" of SE Asian. Over the previous decade the SE Asian states of Thailand, Malaysia, Singapore, Indonesia, Hong Kong, and South Korea, had registered some of the most impressive economic growth rates in the world. Their economies had expanded by 6% to 9% per annum compounded, as measured by Gross Domestic Product. This Asian miracle, however, appeared to come to an sudden end in late 1997 when in one country after another, local stock markets and currency markets imploded. When the dust started to settle in January 1998 the stock markets in many of these states had lost over 70% of their value, their currencies had depreciated against the US dollar by a similar amount, and the once proud leaders of these nations had been forced to go cap in hand to the International Monetary Fund (IMF) to beg for a massive financial assistance. (W.L.Hill, n.d.)
Bonds have a number of characteristics that differentiate one issue from another. We are going to define and describe a number of characteristics in detail below.