Inflation-tamer iBond set to roll

Investing in the inflation- linked bond (與通脹掛扣) could help hedge against (note 1) the rising cost of living, the government claims.

The iBond is HK$10,000 per lot (一手), with the yield (回報, note 2) being the average inflation rate over the previous six months. Average inflation rate between December and May was 4.1 percent. But the Hong Kong Institute of Economics and Business Strategy at the University of Hong Kong predicts it may hit 7 percent in the second half of 2011.

Institute executive director Alan Siu Kai-fat said the sale size (發行數量) - up to HK$10 billion in iBonds will be issued - is too small, and not many people can benefit. There is no cap (上限) for the yield, but a minimum return (最低回報率) is set at 1 percent. Interest will be distributed every six months, and the yield rate will be determined 10 business days earlier.

"We aim to assign (note 3) each subscriber at least one lot," Secretary for Financial Services and the Treasury Ceajer Chan Ka-keung said yesterday.

All adult Hong Kong residents with valid ID cards are eligible to subscribe. Starting next Monday, more than 1,000 branches of the 20 placing banks will receive applications, which can also be made through brokerages or Hong Kong Securities Clearing Company.

Investment account holders can subscribe by internet or telephone banking. Multiple applications (重複申請) will be rejected (不受理). HKSCC has set a brokerage fee at 0.15 percent - or HK$15 per lot - while brokerages can determine freely. Some banks, including HSBC, Bank of China (Hong Kong) (2388), Bank of Communications (Hong Kong), Bank of East Asia (0023) and Citibank will waive (note 4) all subscription and holding fees (認購和寄倉費) for the bond, while CITIC Bank International will not charge any holding fees.

From good to better English:

(note 1)hedge against= 防範。Hedge a question=對問題避不作答。hedge one's bets= 賭博或投資中兩面下注以免全部虧損

(note 2) yield(名詞)=回報。Yield(動詞)= 產生, 放棄。Ci Ci’s land yields heavy crops=Ci Ci塊地的產量非常高。Yield to persuasion=在勸說下失去抵抗力、讓步。

(note 3) assign=分配、配售。They assigned Victor a small room=他們分給我一個小房間。detectives assigned to the case=負責偵查該案的刑警。

(note 4) waive=省免、推遲考慮、放棄。例句: The ban on short selling in Hong Kong had long since been waived (當局很早已放棄禁止沽空活動)。Cambridge University has waived Victor’s tuition fees (劍橋大學免除Victor的學費)。

Victor’s View: Given there are about 3 million adults in Hong Kong, the size of the offered inflation-linked bonds (i-bonds) seems too small as each applicant can invest roughly $30,000. There is little risk in issuing bonds. Perhaps the government will consider doubling or trebling the sale size.

(Victor Fung Keung, director of HK Baptist University’s M.A. in international journalism program, has published 3 books on English-enhancement and plans to write 7 more by the end of 2012. Write to him: deanfungenglish@gmail.com)