Hong Kong stocks such as Alibaba and Tencent are among the 24 stocks which will be priced and traded in both yuan and the Hong Kong dollar under the Dual Counter Model on the Hong Kong stock exchange from Monday.
"China is pushing yuan internationalisation to avert geopolitical risks and reduce reliance on the dollar, and for that purpose, you need wider use of the Chinese currency," said Ding Wenjie, strategist of global capital investment at China Asset Management . The US dollar remains the dominant global currency, accounting for 42 per cent of global payments. The yuan's share is just 2.29 per cent, but is up from 1.95 per cent two years ago.
For foreign investors with yuan holdings,"buying shares in Hong Kong without really going into mainland China will be a much, much easier way to park your holdings of this currency", he said.Under the dual counter arrangement, investors can choose to trade a stock either using Hong Kong dollars via the HKD counter, or yuan via the RMB counter, with market makers providing liquidity and minimising price discrepancies.
"Mainland investors, including mutual fund companies like us, have genuine incentives to trade Hong Kong stocks in yuan," said Ding of ChinaAMC.
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