Wednesday, May 29, 2024
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Hong Kong Exchanges and Clearing (HKEX), the bourse operator, announced its approval of 21 firms, including Chinese tech giants Tencent Holdings, Alibaba Group Holding, Xiaomi, and Meituan, for yuan share trading counters. The market capitalization of these 21 firms stood at HK$12 trillion (US$154 billion) as of Monday, representing 35% of Hong Kong’s total market capitalization. The scheme is set to commence on June 19, with the yuan shares adding an “8” in front of their existing stock codes, symbolizing prosperity and luck in Chinese culture.

The introduction of dual-counter securities is expected to boost Hong Kong’s yuan hub status and enhance liquidity. Investors will have the flexibility to trade in Hong Kong dollars or yuan, with fungibility between the two categories of shares. Among the other prominent players on the dual-counters list are AIA Group, Bank of China (Hong Kong), Hang Seng Bank, and HKEX itself. Notable mainland Chinese players such as CNOOC, China Mobile, Geely Automobile, Lenovo, Kuaishou Technology, Baidu, JD Health, and JD.com are also included.

While Ping An Insurance, BYD, and Great Wall Motor had expressed their interest in yuan share trading counters, they were not among the approved firms on Monday. The HKEX spokesman stated that their applications were still being processed. In addition to the firm approvals, nine financial institutions, including BOCI Securities, China International Capital Corporation Hong Kong Securities, and CLSA, have been appointed as market makers to ensure sufficient trading liquidity.

Nicolas Aguzin, CEO of HKEX, remarked that the new dual-counter model is a significant milestone for Hong Kong’s capital markets. It will provide issuers and investors with more options, enrich the yuan product ecosystem, solidify Hong Kong’s position as the leading offshore yuan hub, and support the internationalization of the Chinese currency.

Brokers have noted that Hong Kong’s close to 1 trillion yuan in deposits will be ample for local investors seeking to trade yuan shares for better returns. The approval of these 21 firms for yuan share trading counters is expected to drive yuan internationalization and foster tech innovation in Hong Kong’s financial landscape.

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