Bonds trading is the buying and selling of debt securities or bonds of corporations or governments. Bonds are loans by an entity to another entity. The money received from the issuer is called the issue price.

How does bonds trading work?

During bonds trading, one party buys a bond from another party at one price while simultaneously agreeing to resell that same security at a fixed future date if those conditions are met, either at an agreed-upon price or perhaps for a premium. This may be referred to as simply purchasing a bond outright, making it your possession when you trade in bonds in Hong Kong.

 While the bond is in your possession, there are numerous options of what you can do with it, including trading it for a profit, holding on to it until maturity when you will receive the total amount back, or selling it at a loss.

 The party who purchased the bond is obligated to resell it to someone else at some point in the future. If the price of that same security goes up between transaction dates, they sell it at a profit; if it goes down, however, they will lose money.

Bonds vs Stocks

One crucial thing distinguishing bonds from stocks is that bonds require regular interest payments while stocks pay dividends. This means that an investor will collect regular income while holding onto their stock and rely upon capital appreciation (gains) for profit. On the other hand, Bondholders will not see any income until the bond is sold and will only realise capital appreciation if they sell it at a higher price than they originally bought it for.

 Bonds are typically less risky investments than stocks, meaning less potential for significant losses; however, this isn’t always the case. Bonds can be affected by credit ratings of the issuer, prevailing interest rates and company or country-specific events.

Trading bonds in Hong Kong

The securities market in Hong Kong was established with the introduction of bond trading in 1891. More than 740 listed companies in Hong Kong have $2 trillion worth of market capitalisation. It operates under the Hong Kong Stock Exchange, Hong Kong Futures Exchange, and SEHK. The exchanges provide a platform for investors to trade bonds.


Types of bonds

Bonds trading in Hong Kong is similar to that of other countries, but a few distinctions set it apart. Here are the main types of bonds available to traders.

1. Treasury note

The first type of bond traded in Hong Kong is the treasury note. A treasury note is a short-term debt instrument issued by a government or corporation. They are usually sold at a discount and have a fixed interest rate. The maturity date of a treasury note is typically less than one year.

2. Treasury bill

The second type of bond traded in Hong Kong is the treasury bill. A treasury bill is also a short-term debt instrument, but it has a more extended maturity date than a treasury note. Governments often use treasury bills to finance their operations.

3. Government bond

The third type of bond traded in Hong Kong is the government bond. A government bond is a long-term debt instrument issued by a government. Government bonds typically have a higher interest rate than Treasury notes or treasury bills.

4. Corporate bond

The fourth type of bond traded in Hong Kong is the corporate bond. A corporate bond is a debt instrument that a corporation issues. Corporate bonds typically have a higher interest rate than government bonds.


The primary difference between the bonds traded in Hong Kong and the bonds traded in other countries is that the Hong Kong bonds are all denominated in Hong Kong dollars. This makes them less risky for foreign investors. For more information on how to trade in bonds, go to reputable online brokers. Try out a demo account and start trading immediately.