The Financial Services Development Council has proposed a HK$100 billion investment scheme in Qianhai under the qualified domestic institutional investor programme to encourage mainland companies to invest in Hong Kong.
The plan is among 21 proposals that the council has suggested to further develop the city's yuan business.
Hong Kong is facing tougher competition from London and Singapore to secure its position as the major offshore yuan trading centre.
Other proposals include further relaxing cross-border yuan lending and allowing state-owned enterprises and China Investment Corp to invest in yuan products in Hong Kong.
"These proposals will need the green light from Beijing. What we are suggesting here is in line with the country's policy to internationalise the yuan," said Laura Cha Shih May-lung, the chairman of the council.
Cha yesterday unveiled the council's first report since it was set up in January. The council, the brainchild of Chief Executive Leung Chun-ying, aims to conduct research and develop proposals to boost the city's financial market.
The council proposed a Qianhai QDII scheme, or QDII3, to provide a combined quota of HK$100 billion, which is composed of 50 billion yuan (HK$63 billion) and US$5 billion, to banks, brokers, insurers or fund houses in Qianhai to allow them to invest in Hong Kong or overseas.
Mainlanders can invest overseas only through QDII, which was launched about 10 years ago, due to the country's capital controls. Under the scheme, they can buy fund products designed by mainland banks and fund houses, which are granted quotas to invest in Hong Kong or overseas.
Last year, the mainland said it planned to introduce QDII2 to allow some individual investors to trade Hong Kong securities directly.
The council also called for tax exemptions to draw private equity and mutual funds and encourage the creation of real estate investment trusts.
Hong Kong now only had 10 reit listings, lagging overseas markets, the council said. It proposed tax reductions be offered and the 10 per cent reit investment limit on the Mandatory Provident Fund removed to encourage more issues.