The HSBC Asian Local Bond Index (ALBI) will measure the total return of liquid, local currency bonds in Hong Kong, India, Malaysia, the Philippines, Singapore Taiwan and Thailand. There will be eight sub indices measuring the local currency performance of each of the local markets mentioned above as well as one for China.
The regional index will track the total US dollar returns of these sub indices and will go alongside the Asian Dollar Bond Index launched by HSBC in 1999.
In the ALBI, Korean bonds will have the highest weighting with 37% of the index. The next highest will be Hong Kong with 18%. India then follows with 17% and then Singapore with 14%. At the lower end Taiwan makes up 5%, Malaysia 4%, Thailand 2% and the Philippines just 1%.
The bonds that will form the basis of the indices will be government issues, quasi government and corporate bonds, all with fixed rate coupons. The weighting of each bond within its sub index will be determined by its market capitalization, while HSBC will reweight the country weighings in the regional index twice a year. The indices will be repriced at the end of every day.