Hong Kong’s currency has struggled at the wrong end of its trading band for much of the past quarter. For mainland Chinese investors , it may be timely to welcome a belated refinement to the Stock Connect trading scheme. Five companies including Anta Sports Products, Kuaishou Technology and Hong Kong Exchanges and Clearing (HKEX) have applied to have their stocks priced in the Chinese currency. Ping An Insurance, Tencent Holdings and New World Development could also give the plan a nudge, based on their initial support. “The dual-currency counter will attract more investors by reducing trading costs and boosting liquidity,” said Xu Yizhou, an analyst at Industrial Securities in Shanghai. “It will also promote the offshore yuan business in Hong Kong by having more foreign investors holding yuan assets. Christopher Hui Ching-yu, secretary for financial services and the treasury, said the market-making system for yuan-based shares would start by the end of June, reiterating the target announced last October. HKEX said the dual-currency stocks from eligible companies would begin by midyear as scheduled, a spokesperson said by email on Friday. HKMA steps in to prop up the local dollar for the first time this year The Hong Kong dollar has traded on the weaker end of its currency band over the past 12 months, eroding returns for investors. The weakness has been amplified by the Federal Reserve’s policy “lift-off” in March last year, forcing the city’s monetary authority to intervene 41 times in 2022 to defend the dollar peg. The yuan depreciated more than 7 per cent versus the Hong Kong dollar over the past year. The realised 100-day volatility of the currency pair rose to a record high this month, according to Bloomberg data. Hong Kong is the world’s biggest market for offshore yuan, processing some 75 per cent of the settlement involving the currency globally. The city had a 1 trillion yuan (US$145.7 billion) deposit of the offshore yuan as at end-2022, according to central bank data, versus 718.3 billion yuan in 2020. Yuan-based shares for the Stock Connect scheme may be long overdue. Yet, much of the talk about it over the past decade has produced little. Toll-road operator Hopewell Highway Infrastructure (now renamed Shenzhen Investment Holdings Bay Area Development) remains the firm with dual-currency shares. Since its creation in 2012, the turnover only amounted to 7 per cent of the volume in Hong Kong dollar version, according to exchange data. The stock is not among eligible securities in the Southbound leg of the Stock Connect scheme. “The number isn’t a problem and there will be more seeking to issue yuan-based shares going forward,” said Chen Hao, a strategist at KGI Securities in Shanghai. “Rarity is the biggest selling point now and they are attractive to A-share investors.” That dismal run could change with the entry of bigger-capitalised stocks and market favourites like Tencent, Geely Auto could give the Stock Connect scheme some tonic, he added. The five companies that have filed their applications will offer home investors an avenue to bet on some unique companies or industries not available in the onshore market. These would include JD.com, Meituan and China Resources Beer who are also joining the fray based on local media reports. “Barring any technical hiccups, the dual-currency trading model could probably be ready in May or June, KGI’s Chen said. “That would be perfect for timing.” Additional reporting by Enoch Yiu