HKMA welcomes the launch of the Asian Bond Fund 2

The Hong Kong Monetary Authority (HKMA) welcomes the announcement by EMEAP to launch the second stage of the Asian Bond Fund, or ABF2. The EMEAP Group has 11 central bank members, including the HKMA, in the East Asia and Pacific region. The ABF2, which will have an initial size of US$2 billion, will invest in domestic currency bonds issued by sovereign and quasi-sovereign issuers in all EMEAP economies except Australia, Japan and New Zealand. All the 11 EMEAP members will invest in ABF2. A joint EMEAP Press Statement issued by the EMEAP Group announcing the launch of the ABF2 is attached.

The EMEAP Group has finalised the study on the structure and design of the ABF2, which comprises the Pan-Asian Bond Index Fund (PAIF) and the eight Sub-Funds. Implementation of ABF2 is divided into two phases: Phase 1 investment will be confined to EMEAP central banks only whereas in Phase 2 the eight Sub-Funds and the PAIF will be open to investment by other public and private sector investors. It is intended that both the PAIF and the Hong Kong Sub-fund will be listed on the Stock Exchange of Hong Kong, subject to the approval of relevant authorities.

Welcoming the launch, Mr Henry Tang, the Financial Secretary, said, "ABF2 represents a historic milestone for central banking cooperation to promote the development of the domestic and regional bond markets in Asia. I am particularly pleased that EMEAP has chosen Hong Kong as the preferred centre for the listing of the PAIF, a key component of ABF2 and a new asset class for regional and global investors in Asia."

Mr Joseph Yam, Chief Executive of the HKMA, said, "The HKMA has played a leading role in helping promote the bond markets in the region, which will over time improve the efficiency of financial intermediation in Asia. The development of deep and liquid bond markets in EMEAP economies will in turn contribute to greater financial stability in the region. Apart from market development benefits, the ABF2 also offers a good opportunity for asset diversification and yield enhancement for central bank reserves."

The ABF2 project is driven mainly by the EMEAP Working Group on Financial Markets. Mr Norman Chan, Deputy Chief Executive of the HKMA and Chairman of the EMEAP Working Group, said, "I would like to thank all members of the Working Group for their support, dedication and hard work in the last 18 months, without which it would not have been possible to bring this very important but complex initiative into fruition. There is a great deal of work that lies ahead for the Working Group and I look forward to working closely with the financial community to ensure the successful implementation of ABF2."

Attachment:
Joint EMEAP Press Statement (Word File, 84KB)

For further enquiries, please contact:

Jasmin Fung, Manager (Press), at 2878 8246 or
Thomas Chan, Senior Manager (Press), at 2878 1480

Hong Kong Monetary Authority
16 December 2004