The Securities and Futures Commission is in the process of approving three more yuan-denominated exchange traded funds (ETFs) that will allow Hong Kong investors to bet on mainland stocks.
Just two weeks ago, the regulator approved the first yuan ETF, a five billion yuan (HK$6.07 billion) fund issued by China Asset Management (CAM).
Alexa Lam, the SFC's deputy chief executive, said it is vetting three applications from different firms to launch yuan ETFs, all also five billion yuan in size.
An ETF allows buyers to invest in a basket of stocks. The CAM ETF, for example, tracks the CSI 300 Index, the components of which are the 300 A shares with the largest market capitalisation and the best liquidity on the Shanghai and Shenzhen stock exchanges.
Lam said, without giving further details, that the three ETFs pending approval would track different indices on the mainland, allowing Hong Kong investors more choice.
'Investors, however, should also be aware of the risk factors while they are investing in yuan-denominated ETFs, such as the fact that the yuan is not yet fully convertible,' she said. The A-share ETF scheme is part of China's broader efforts to internationalise its currency and get more overseas investors to invest in the mainland market, which has been among the worst performers worldwide in the past couple of years.
The Shanghai Composite Index has advanced just 1.1 per cent so far this year, with more than a third of retail investors losing over 30 per cent of their investment in equities in the first half.