Brokers have raised questions over the Government's proposal for Hong Kong Exchanges and Clearing to launch a new class of shares traded in yuan. While the proposed move would boost market turnover, there were many technical difficulties to overcome before it could be implemented, they said. Hong Kong has asked Chinese authorities to allow mainland investors to invest directly in SAR stocks using yuan, according to sources close to the Government. The plan would require HKEx to launch a new class of shares denominated in the mainland currency. Creating yuan shares could overcome mainland concern over the proposal's potential impact on the stability of the yuan, a source said. Hong Kong Stockbrokers Association chairman Wilfred Wong Wai-sum said the proposal would boost market turnover and business for local brokers as mainlanders had combined domestic currency savings of more than 70 billion yuan. However, he said settlement of yuan share trades would be a problem as the currency was not yet freely convertible. No Hong Kong banks offered yuan settlement services. Hong Kong and international investors would find it difficult to trade the new shares, as they did not have large yuan sums on hand. Yuan shares would then be traded by mainland investors only. 'If international investors cannot trade the yuan shares, there would be thin trading of these stocks,' Mr Wong said. BOCI Securities managing director Fung Chi-kin said the proposal would require Hong Kong blue chips to issue shares in yuan, but they might not need to raise funds in the mainland currency. Christfund Securities managing director Christopher Cheung Wah-fung said Hong Kong's 500 brokerages were not allowed to promote themselves in the mainland so they would find it difficult to serve mainland investors. If the proposal was implemented, Hong Kong brokers would not benefit unless China opened its market, he said. Another broker said mainland enterprises could raise yuan by issuing A shares on the Shanghai or Shenzhen stock markets, so had little incentive to issue yuan shares in Hong Kong.