HKEX’s dual-counter model creates investment option for city’s trillion-yuan deposits, boosts currency hub status
- The dual-currency counters will offer investors a choice of trading in Hong Kong dollars or in yuan and the two categories of shares will be fungible
- The number of yuan-share class funds have near doubled to 377 at the end of 2022 from 191 in 2018
“Thirty years ago, international investors did not care about the yuan shares listed in Shanghai and Shenzhen,” said Chan, permanent honourable president of industry body Institute of Securities Dealers, while referring to the indifference towards the undervalued currency which was hard-pegged to the dollar.
But things have changed. The 60-year old Chan says the wave of reforms unleashed by China in the past two decades has increased the demand for its currency, propelling its value. It all began in 2005 when China’s exchange rate regime shifted to a managed float under which its moves are driven by a basket of currencies. This drove a rapid appreciation of the currency which now fetches HK$1.12, a vast improvement from the early 90s when the pegged currency could only buy HK$0.94.
“The yuan has turned from a domestic currency into a more internationally accepted unit, thanks to the Central government’s reforms over the past two decades which allowed the use of the yuan to settle trade, make investments and buy insurance products,” Chan said.
