HK-listed firms rush to launch yuan counter; move to cement city's int'l financial hub status
Published: Apr 23, 2023 09:05 PM
A view of Hong Kong Photo: VCG

A view of Hong Kong. Hong Kong stayed in the fourth place out of 120 assessed financial centers in the Global Financial Centres Index Report published on March 24, 2023, showcasing the financial competitiveness of the city. Photo: VCG

A dozen companies trading in the Hong Kong Special Administrative Region (HKSAR) have applied to have their shares priced in both the yuan and the Hong Kong currency. A dual-currency counter will solve the problem of short supplies of the Hong Kong dollar and foreign currencies, especially the US dollar, while strengthening the yuan's internationalization and the city's status as an international financial hub, experts said.

Since March, more than 15 companies trading on the Hong Kong bourse, including Anta Sports Products, Kuaishou Technology, Ping An Insurance, Tencent Holdings, New World Development and Hong Kong Exchanges and Clearing (HKEX) - which operates the bourse - have filed applications.

HKEX announced the introduction of a new Hong Kong dollar-yuan dual counter model in its securities market in December 2022, further supporting the listing, trading and settlement of yuan counters in Hong Kong. In March, HKEX said it had submitted an application to launch a yuan counter for the trading of HKEX shares as part of the model.

In Hong Kong, the amount of yuan deposits totaled nearly 1 trillion yuan ($145 billion) as of the end of 2022, and about 75 percent of global offshore yuan settlements are handled in Hong Kong. However, offshore yuan investment is limited to a few sectors including deposits, government bonds, insurance and wealth management. 

Given this situation, the rollout of a dual counter model will greatly enrich the investment channels for offshore yuan, which will be important for boosting the currency's internationalization, analysts said.

"It is natural for Hong Kong-listed companies to launch yuan counters along with the increase of yuan-denominated credit, while US economic woes and its irresponsible financial policies are leading to a loss in international investors' confidence in the US dollar," Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at Renmin University of China, told the Global Times on Sunday.

Liang Haiming, chairman of the China Silk Road iValley Research Institute, told the Global Times on Sunday that the move will ease shortages of the Hong Kong dollar and foreign currencies, especially the US dollar.

"As an important way to expand yuan-denominated financial assets, the new model will not only bring convenience to Chinese mainland firms but also strengthen the yuan's internationalization and cement Hong Kong's standing as an international financial hub," Liang said.

Speaking at the Fifth Guangdong-Hong Kong-Macao Greater Bay Area Financial Development Forum on Saturday, Hong Kong Finance Secretary Paul Chan Mo-po said that the HKSAR government is actively preparing to launch a yuan counter for Stock Connect programs, aiming to bring new catalysts for the issuance and trading of offshore yuan stocks.

Dong said that the financial authorities of Hong Kong should revise relevant laws as well as the registration, exchange and pricing mechanisms to diversify the category of trading currencies. 

"Hong Kong's importance for global financial markets should be enhanced by designating more trading currencies aside from traditional ones such as the US dollar," he said.

As part of the measures to promote the further optimization and improvement of the Stock Connect mechanism, the Shanghai-Shenzhen-Hong Kong Stock Connect Trading Calendar Optimization is scheduled to be implemented on Monday. This move will reduce the number of non-trading days by about half per year, increasing the number of trading days for investors and ensuring trading continuity for investors, according to the stock exchanges' notice.

China continues to optimize the use of yuan settlements for cross-border trade. In 2022, cross-border trade settled in yuan grew by 37 percent year-on-year, accounting for 19 percent of the country's total, according to data released by the People's Bank of China on Sunday.