Bank of China Cinda Asset Management stated that although prudence is needed under the current macroeconomic and geopolitical background, there are also some medium-term investment opportunities in the bond market. By combining dynamic portfolio-duration management, prudent credit selection, and making timely adjustments, it will help to increase the value of the bond portfolio. Over the past 10 years, Hong Kong dollar bonds and major stock markets have shown a low correlation. Allocating to bond assets, especially investment-grade Hong Kong dollar bonds, is worth paying close attention to for investors seeking stable long-term returns through constructing a diversified portfolio. The bank pointed out that as we approach 2024, most major stock markets globally have performed well since the beginning of the year. From the perspective of portfolio asset allocation, a balanced and diversified strategy should be adopted. Therefore, apart from the equity portion, the bond portion in the portfolio also plays an important role. Given the uncertainty in global financial markets, investors should maintain caution in unclear market conditions, balancing potential returns and stability of the portfolio. In this consideration, investment-grade bonds would be a suitable choice. For local investors in Hong Kong, investment-grade, low-volatility Hong Kong dollar bonds that do not involve exchange rate risks play a buffering role in the investment portfolio. Thanks to the Hong Kong SAR government's active issuance of various types of bonds including silver bonds and green retail bonds in recent years, the overall Hong Kong dollar bond market has gradually attracted more attention. In fact, in addition to the Hong Kong SAR government and related organizations, many well-known financial institutions and local Hong Kong companies have issued Hong Kong dollar bonds. These issuers are generally considered to have good financial conditions, stable cash flow, and a conservative management policy, with relatively healthy balance sheets. Perhaps because of this, the bonds they issue generally belong to investment-grade bonds, meaning the potential risks of default and capital loss to investors are relatively low in the eyes of credit rating agencies. Furthermore, the bank also pointed out that the impact of currency factors on investment returns should not be ignored. The US dollar index has been strong in recent years, and without currency hedging, investors may see their actual returns discounted. With the linked exchange rate system between the Hong Kong dollar and the US dollar, the Hong Kong Monetary Authority will buy or sell Hong Kong dollars in response to the Hong Kong dollar exchange rate to keep it within a set range. The bank stated that under the linked exchange rate system, Hong Kong dollar interest rates roughly follow US dollar interest rates. Although local liquidity conditions and seasonal factors in Hong Kong may have an impact, overall, the risk of the difference in Hong Kong dollar and US dollar interest rates is relatively manageable. At the same time, although the size of the Hong Kong dollar bond market has grown in recent years, taking the issuance plan of the Hong Kong SAR government's institutional bonds as an example, the number of outstanding bonds is only in the low double digits, which cannot be compared to government bonds of developed economies such as the United States or Japan. Bank of China Cinda Asset Management pointed out that this structural supply shortage can provide support for bond prices to a certain extent, and volatility is relatively low. Additionally, recently issued medium-term Hong Kong dollar bonds by well-known institutions in Hong Kong also offer attractive yields. It is worth mentioning that in a high interest rate environment, if some investors view time deposits as a low-risk method to obtain stable returns, they may face "reinvestment risk." Indeed, maintaining a high-interest rate environment for a longer period is still the basic scenario, but the interest rates on Hong Kong dollar deposits are highly correlated with the federal funds rate, meaning that when the deposits mature, if the Fed has already started cutting interest rates, the interest rate on rollovers may be lower. On the other hand, investors who have locked in an ideal yield when allocating bond assets may even benefit from the potential rise in bond prices once the rate-cutting cycle officially starts.