Andrew Bezen

Financial Writer


How to trade bonds in Hong Kong?

How to trade bonds in Hong Kong?


A bond is a debt security that obligates the issuer to repay principal and interest on a predetermined schedule. The most common type of bond is a fixed-income security issued by a government or company. Bonds pay interest periodically until their maturity date, and then the repayment of principal occurs. There are also some types of bonds with no maturity date, but they are typically not as common as standard maturities.

Steps for trading in bonds

Here are the steps necessary to begin trading in bonds

Choose what to buy

Start by choosing what type of security you want to buy and go online to find its current price quote. Keep track of any fees the broker will charge you to trade the bonds so you can calculate how much your cost basis is before making a purchase.

Place your order

Once you have found an acceptable price quote for the security, place your order with your broker using his website interface, which may require some simple registration steps if it is the first time you are trading with them.

Pay on confirmation

Wait until your brokerage firm notifies you that the trade has been executed, and then send them any required funds for your purchase. At this point, you will be assigned several bonds whose value is equal to the total value of your trade order.

Keep an eye on bond prices

Bond prices go up and down with market conditions and interest rate changes. As many factors influence these values, it pays to study them and make informed decisions about buying or selling fixed-income securities.

Sell when the time is right

Lastly, if you choose not to keep the bonds until maturity, then sell them at an opportune time. If you do not know when such times occur, consult someone who does, such as a broker or financial adviser.


Benefits of trading bonds in Hong Kong

The most significant advantage of trading bonds is that it offers a greater yield than stocks. This might sound counterintuitive because one would think that blue chips, which are equities that represent a sure thing, would pay better dividends than riskier government bonds.

However, this is not true for Hong Kong’s local exchange market because most shares are held by institutional investors who use them as collateral to borrow money at cheaper rates from banks or other financial institutions. This effectively makes these loans to the companies highly-leveraged bets, and they need only make small returns to earn interest on their borrowed funds based on how much they have borrowed.

On the other hand, fixed income securities are traded directly by individual investors, so no borrowing is involved. This means that payouts on bonds in Hong Kong are more stable than dividends on stocks. Most companies would not bother with the risk of default when they have more manageable, cheaper options to finance their operations with.

Because most stocks are overvalued at this point, trading bonds in Hong Kong is a much better option for traders who want to make money rather than hold onto assets for the long term. Bond traders will see their portfolios slowly increase in value based on interest payments from governments and corporations worldwide. By contrast, stock traders can only hope that their investments go up fast enough to correct market inflation within a reasonable amount of time, which often takes years.

The best part about trading bonds in Hong Kong is how easy it is to get started. This is a beginners’ investment. No minimum initial deposit is needed to sign up for a bond trading account, which only takes a few minutes to set up.



As an alternative investment, bonds are not as popular in Hong Kong as they might be. The local market is flooded with real estate stocks and index funds, while individual traders shy away from the bond market. If you are interested in trading bonds in Hong Kong, it is recommended that you use a reputable online Saxo forex broker for the best advice and lowest commissions rates.


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