Hong Kong Plans To Extend Bond Market

by Carla Johnson, Investors Offshore.com

07 December 2001

The government of the SAR announced this week that in an attempt to expand the territory's bond market, they are considering offering tax incentives for companies which raise funding through the debt-capital market.

As part of the initiative to establish the Hong Kong bond market as the largest in Asia, the authorities are launching a three-pronged attack. As well as the planned tax breaks, the Hong Kong Monetary Authority (HKMA) recently announced that it is looking to introduce a real-time settlement system for yen and euro denominated bonds to encourage more companies to list in Hong Kong. The government also plans to simplify listing procedures and reduce the documentation required for bond issuers.

According to the South China Morning Post, Secretary for Financial Services, Stephen Ip Shu-kwan introduced the package of measures to legislators on Wednesday, explaining that: 'In addition to our first class financial infrastructure, these measures will enhance Hong Kong's status as a regional bond centre and attract overseas issuers and investors to Hong Kong.'

Although at present, tax incentives for bond investment are only available to corporate investors purchasing debt in one of Hong Kong's 10 supranational companies, the authorities announced on Wednesday that they hope to substantially extend both the availability and scope of the tax breaks.

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