Joseph Yam Chi-kwong has climbed aboard the yuan bandwagon.
The former Hong Kong Monetary Authority chief executive has joined the chorus of leading figures in finance urging the city to launch more yuan investment products.
The government hopes to turn Hong Kong into a trading centre for the Chinese currency, but brokers and institutional investors doubt international investors will be interested in putting their money in the yuan, which is not yet fully convertible.
Yam, executive vice-president of the China Society for Finance and Banking, said yesterday that the market should be more innovative in creating yuan investment products. The society is a research institute under the People's Bank of China.
Yam said yuan shares would be ideal because 'many institutions and individual investors in Hong Kong want to buy yuan shares directly'.
On Tuesday, Hong Kong Exchanges and Clearing chief executive Charles Li Xiaojia said the city could see its first yuan-denominated initial public offerings as early as next year.
Yam said international investors had to exchange US dollars or other foreign currencies for Hong Kong dollars to subscribe for IPOs or to trade in the local stock market, leading to inflows of hot money. Inflows and outflows could make the Hong Kong dollar fluctuate. Allowing for yuan-denominated IPOs would be 'a win-win solution' because it would prevent those fluctuations.
