A fund that will allow mainland investors to buy into the Hong Kong stock market for the first time will be launched by the end of this year. However, it would not provide a significant boost to the market, said Professor Chan Ka-keung, secretary for financial services and the treasury. The exchange-traded fund (ETF), announced by Vice-Premier Li Keqiang during his visit to the city last week, would introduce a fund that tracks the Hang Seng Index (HSI) on the Shenzhen or Shanghai stock exchanges. The ETF is widely seen as a proxy for the proposed 'through-train' investment scheme shelved in 2007, which would have allowed individual mainland investors to buy shares in Hong Kong directly for the first time. Speculation about that scheme propelled the HSI up by 40 per cent in a month, to over 30,000 points. The scheme was formally scrapped last year. Chan said he did not think the ETF would 'cause the stock market to move up or down vigorously, or make the HSI top 30,000 points again'. He said the ETF would be more controllable than the 'through-train' scheme, which was mooted by the Tianjin city government rather than Hong Kong's leaders. The size of the ETF has yet to be decided but Chan said he hoped it would be launched this year. He also urged people to stay calm amid fears of a double-dip recession in the United States and the burgeoning sovereign debt crisis in Europe. 'The Hong Kong economy is still in good shape,' Chan said. However, he admitted that the city's stock market would inevitably be affected by turmoil in the global markets. Chan said it was he and former Monetary Authority chief executive Joseph Yam Chi-kwong who first pitched the idea of an ETF to Beijing in 2007. Over the past four years, technical issues surrounding the ETF have been resolved. They include the establishment of an arbitrage system, better risk management and real-time quotes for stock and fund prices, Chan said. Chan also said Beijing had taken a small yet vital step towards the liberalisation of the yuan. On Wednesday, Li said Beijing would allow local and foreign firms to use the yuan more widely for cross-border transactions. Qualified foreign institutional investors (QFII) would also be allowed to invest in mainland securities. 'Only eight per cent of Sino-foreign trade is settled in yuan at present, while the rest is [US] dollar-denominated,' Chan said. He also said that Beijing had been examining the yuan's role in international trade following the global financial crisis and the steady weakening of the US dollar. 'The yuan-based QFII scheme enhances foreign investors' ability to raise yuan-denominated funds in the city and invest directly on the mainland, making Hong Kong the largest offshore market for yuan transactions,' he said.