2023-06-09 14:38:00
On June 9, the Hong Kong Stock Exchange announced the addition of three new dual-counter securities, namely BYD (01211.HK), Ping An (02318.HK) and Great Wall Motor (02333.HK). The number of securities under the “RMB Dual Counter Model” has 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 Connect. Leung Fung-yee, chief executive of the China Securities Regulatory Commission, said on 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 previously announced 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. It said that many companies are waiting to see the operation 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 more companies will join the dual-counter mechanism in the future.”
Cha Meilun 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 participate in 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 regarding 3 billion to 4 billion yuan, which is a good performance in the initial stage. In the future, we will continue to explore the expansion of the scope of interconnection, such as striving to allow more 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 following 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 the expansion and optimization of various interconnection plans in the future, including the study of what is allowed in the Hong Kong Stock Connect. 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 the further opening of the mainland financial market, and continue to inject new impetus into the Hong Kong capital market.”
Li Jiachao said that the launch of Bond Connect southbound transactions and the Greater Bay Area Cross-border Wealth Management Connect 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 places into a new milestone. In Li Jiachao’s view, as a global offshore RMB hub, Hong Kong has the conditions to play 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.
Liang Fengyi revealed that the mainland regulators have agreed in principle that the 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 the inclusion of Hong Kong Stock Connect will allow more RMB to be circulated offshore.
Yao Jiaren, co-chief operating officer and head of equity securities of Hong Kong Stock Exchange, introduced that following the launch of the dual-counter model, dual-counter securities will be added in stages. . Yao Jiaren said that there is no pre-condition 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 onshore RMB can be used to directly purchase relevant shares.
Yao Jiaren said that Hong Kong has a fund pool of nearly 1 trillion yuan, and the relevant funds need investment tools, and there is a demand for RMB-denominated products. It believes that the increase in the holdings of RMB investment products will drive related investment and financing opportunities and drive the expansion of the entire RMB capital pool.
Ensuring sufficient 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 with the previous Hong Kong allowing companies to issue “dual currency and double shares”, the dual counter model introduces a market maker mechanism to provide bilateral quotations for buying and selling on the RMB counter of relevant shares. In response to the Hong Kong government’s exemption of stamp duty for dealers, dealers can set 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 Hong Kong Stock Exchange Operations Division, said that each participating listed company has at least 4 market makers to provide liquidity.
Xu Zhengyu, the Secretary for Financial Services and the Treasury, said that he will ensure that there is sufficient liquidity in the dual-counter model. The emergence of market makers will allow these RMB counters to have 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, or vice versa.”
Wen Jie, Head of Investment Strategy Department of KGI Asia, 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 potential and investment prospects. effect.
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