Hong Kong to let companies issue yuan-denominated shares, allow trading via Connect scheme in first half of 2023, official says

Waiver of stamp duty will encourage brokers to act as market makers for trading of yuan-denominated shares

HKEX will consult the market to introduce the marketmaker system in the first half of next year, paving way for trading under the Stock Connect

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The Connect Hall at Hong Hong Exchanges and Clearing (HKEX) in Central, pictured on July 8, 2022. Photo: SCMP / Jonathan Wong

Published: 1:01pm, 3 Oct 2022Updated: 5:19pm, 3 Oct 2022

Hong Kong plans to let the city’s publicly traded companies issue yuan-denominated shares to provide mainland investors easier access and widen the Chinese currency’s worldwide usage, in a move that was lauded by more than a dozen companies.

The government and the Hong Kong stock exchange plan to set up a marketmaker system in the first half of 2023 to allow the Stock Connect transborder investment channel handle yuan-denominated shares in Hong Kong, according to Christopher Hui Ching-yu, secretary for financial services and the treasury.

“Introducing a marketmaker regime will enhance the overall efficiency and quality of the trading system of yuan stocks and promote the liquidity of these shares, and avoid the widening of spread and excessive price fluctuations caused by a lack in product liquidity,” Hui said.

The yuan share trading plan, first unveiled in the budget of Financial Secretary Paul Chan Mo-po in February, is part of the government’s efforts to enhance the city’s position as an international financial centre. It comes after Hong Kong fell to fourth place in a ranking of financial centres, falling behind Singapore, which rose to third after New York City and London.

Christopher Hui Ching-yu, Hong Kong’s secretary for financial services and the treasury, pictured at the Central Government Offices on August 30, 2022. Photo: SCMP/ K.Y. Cheng

More than a dozen publicly traded companies, including this newspaper’s owner Alibaba Group Holding, came out in support of the plan. Tencent Holdings, New World Development, Ping An Insurance, and Xiaomi were among the companies that said they would explore yuan-denominated offerings.

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