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Hong Kong investors are increasing interest in US Treasuries

The push is tied to rising yields, with most MPF tenors now yielding above 5% and a recent downturn in Hong Kong stocks and housing-linked costs.

Reported · Written up by our desk · Government Bonds

LiveMint Markets says Hong Kong investors are showing increased interest in US Treasuries, pointing to the city’s currency peg to the US dollar, which reduces currency risk.

The outlet links the shift to fallout from the US Federal Reserve’s aggressive 525-basis-point hiking cycle that began in March 2022, noting that Hong Kong borrowing costs adjusted quickly and sharply.

It adds that the Hang Seng Index and home prices fell from late-2021 peaks by as much as 44% and 16%, respectively, and that the Hong Kong Mandatory Provident Fund, with HK$1.7 trillion in assets under management as of June, recorded its worst loss since the Global Financial Crisis in 2022.

LiveMint Markets says a typical MPF account holds two-thirds in equities and 21% in debt securities, and it argues that with most tenors now yielding above 5%, US sovereign debt has become more appealing for wealth portfolios.

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