On June 9, the Hong Kong Stock Exchange announced the addition of three dual-counter securities, namely BYD (01211.HK), Ping An (02318.HK) and Great Wall Motor (02333.HK) The number of securities under the “Model “RMB Dual Counter” increased to 24.
The Hong Kong Stock Exchange will officially launch the “Hong Kong dollar-RMB dual counter model” on June 19, which has become a hot topic in the Hong Kong industry. Hong Kong Chief Executive Lee Ka-chao said in a video speech at a public forum today that Hong Kong will continue to promote the expansion and optimization of various interconnection plans with the mainland, including studies to allow the addition of RMB stock trading counters in the Hong Kong Stock Link. Leung Fung-yee, chief executive of the China Securities Regulatory Commission, said at the same occasion that the inclusion of the dual counter model in Hong Kong Stock Connect will allow more RMB to circulate offshore.
The first batch of dual counter securities increased to 24
The Hong Kong Stock Exchange announced today that three more securities have been designated as dual counter securities, namely BYD, Ping An and Great Wall Motor. In addition to the 21 securities issued by the Hong Kong Stock Exchange to participate in the official launch of the “Hong Kong dollar-RMB dual counter model” on June 19, the first batch of dual counter securities has increased to 24.
Hong Kong Stock Exchange Chairman Cha Mei-lun said at the public forum that she has great confidence in the dual counter business, which will provide more trading options for Hong Kong-listed companies and investors, as well as enrich the RMB product ecosystem . He said that many companies are waiting to see the implementation of the first batch of dual counter securities, and it is expected that more companies will apply for the addition of RMB counters in the future. “There are 21 companies in the first batch, and many companies told us that they want to see How the first batch works in the initial stage, I believe that more companies will join the mechanism dual counter in the future.”
Cha Mei-lun said that HKEx will continue to enrich RMB products and risk management tools, including treasury bond futures, to manage related risks for international investors investing in Chinese treasury bonds, so that more foreign capital can take part in a Chinese treasury bond investment.
Leung Fung-yee, chief executive of the Securities Regulatory Commission, also said on the same occasion that there are other companies applying to participate in the dual counter business. Leung Fung-yee said that the Interchange Link, which was officially launched last month, is running smoothly, with an average daily trading volume of about 3 billion to 4 billion yuan, which is a good performance in the initial stage in the future , we will continue to explore expanding the scope of the interconnection, such as striving to allow greater ETF participation and inclusion in REIT funds.
The industry expects Hong Kong Stock Connect to participate in the RMB counter
Li Jiachao said at the forum that after three years of the epidemic, Hong Kong is striving for economy and competitiveness, Hong Kong will actively integrate into the national development pattern, and will continue to promote expansion and optimization various future interconnection plans. , including the study of allowing Hong Kong Stock Link Increase the RMB stock trading counter, discuss the launch of treasury bond futures in Hong Kong, etc., “Our goal is to provide more risk management products for foreign investors, promote further opening of the mainland financial market, and continue to give new impetus to the Hong Kong capital market.”
Li Jiachao said that the launch of southbound Bond Connect transactions and the Greater Bay Area Cross-Border Wealth Management Link will strengthen Hong Kong’s role in connecting domestic and foreign countries. The Swap Link launched last month has brought the integration of the two place into a new milestone. In Li Jiachao’s opinion, as a global offshore RMB hub, Hong Kong has the conditions to play to its strengths, continue to promote the issuance and trading of RMB securities in Hong Kong, and support mainland companies to issue offshore RMB bonds in Hong Kong Kong.
Liang Fengyi revealed that the mainland regulators have agreed in principle that Southbound Hong Kong Stock Connect can directly use RMB to buy and sell RMB-denominated stocks. This move can save relevant investors exchange costs. She believes that including Hong Kong Stock Connect will allow more RMB to be distributed offshore.
Yao Jiaren, co-chief operating officer and head of equity securities of the Hong Kong Stock Exchange, introduced that dual counter securities will be added in stages after the launch of the dual counter model. Yao Jiaren said that there is no precondition for the trading volume of the RMB counter to be included in the Hong Kong Stock Connect. Instead, the two places need to establish the operating model and technical details, such as whether the RMB can on the land be used to purchase relevant shares directly.
Yao Jiaren said that Hong Kong has a fund fund of nearly 1 trillion yuan, and the relevant funds need investment tools, and RMB-denominated products are in demand. He believes that the increase in the holdings of RMB investment products will stimulate related investment and financing opportunities and drive the expansion of the entire RMB capital pool.
Ensure adequate liquidity for the dual counter model
According to reports, under the dual counter model, similar securities issued by the same listed company can be traded in Hong Kong dollars and RMB, including such transactions in two separate counters and stock transfers between the two counters. Compared to the previous Hong Kong which allowed companies to issue “dual currency and double shares”, the dual counter model introduces a market maker mechanism to provide bilateral quotes for buying and selling on the RMB counter of relevant shares. In response to the Hong Kong government’s stamp duty exemption for dealers, dealers can place stamps at a lower cost between the two counters, thereby reducing the price difference between the Hong Kong dollar counter and the RMB counter.
The Hong Kong Stock Exchange has introduced 9 dual counter market makers. Guo Hanxiao, co-head of the Trading Department of the Operations Division of the Hong Kong Stock Exchange, said that each participating listed company has at least 4 market makers to provide liquidity.
Xu Zhengyu, the Secretary of Financial Affairs and Treasury, said that it will ensure that there is enough liquidity in the dual counter model The emergence of market makers will allow these RMB counters to get quotations. The design also pays special attention to how to ensure the liquidity of the RMB counter, basically it can be bought in RMB and sold in Hong Kong dollars, and vice versa.”
Wen Jie, Head of Investment Strategy of KGI Asia Department, believes that the dual counter model will help Hong Kong become an international financial center, making it easier for RMB funds to buy and sell designated shares. However, he also reminded that the new measures will not significantly improve the stock prices of related securities and the turnover of the Hong Kong stock market. Buying and selling stocks mainly depends on their investment potential and prospects and impact.
