HK set to tap currency's growth
Source: Bloomberg News |
April 21, 2011, Thursday
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Print Edition
Print Edition
HONG Kong will have more regular sales of yuan-denominated shares and Chinese government debt as deposits of the currency double, said K. C. Chan, the city's secretary for financial services and the treasury.
The first yuan initial public offering, a listing of billionaire Li Ka-shing's real estate investment trust, is a "very good product" even though REITs "don't generate as much excitement as regular IPOs," Chan said in an interview with Bloomberg TV. With deposits predicted by economists to reach 800 billion yuan (US$123 billion) in a year "that's a lot of deposits to support an efficient trading platform," he said.
"I expect to see more equity IPOs though they will be trailing in terms of number and percentage compared with yuan bonds," he said. Potential listing candidates include "any company with assets in China and that means most companies in Hong Kong," he said.
China is seeking to reduce reliance on the dollar by promoting use of the yuan in global trade and identified Hong Kong as an offshore hub for investing the currency in its coming five-year plan. The city's deposits in the currency more than tripled to 407.7 billion yuan in the six months through February, the Hong Kong Monetary Authority data show.
"Right now the market is testing the yuan but once they get used to it I expect more IPOs," said Chan, adding that there will be no regulatory limits on volume of issuance. "It's whether companies believe they can get a better valuation."
Li's Hui Xian Real Estate Investment Trust sold shares at 5.24 yuan each, the low end of a range marketed to investors, two people with knowledge of the matter said. The REIT will have a forecast yield of 4.26 percent, based on pricing assumptions presented in the firm's share sale document.
Sales of dim sum bonds totaled 24.2 billion yuan this year, compared with 25 billion yuan in the last three months of 2010, according to data compiled by Bloomberg News. Chan said he is working with Chinese regulators on streamlining rules for bringing funds raised back into the country for direct investment purposes. China's Ministry of Finance is also "receptive" to hold more regular issues than the current annual sales, he said.
Chan said Hong Kong has an advantage as an offshore yuan hub because it conducts 70 percent of international trade settlement in the currency.
The first yuan initial public offering, a listing of billionaire Li Ka-shing's real estate investment trust, is a "very good product" even though REITs "don't generate as much excitement as regular IPOs," Chan said in an interview with Bloomberg TV. With deposits predicted by economists to reach 800 billion yuan (US$123 billion) in a year "that's a lot of deposits to support an efficient trading platform," he said.
"I expect to see more equity IPOs though they will be trailing in terms of number and percentage compared with yuan bonds," he said. Potential listing candidates include "any company with assets in China and that means most companies in Hong Kong," he said.
China is seeking to reduce reliance on the dollar by promoting use of the yuan in global trade and identified Hong Kong as an offshore hub for investing the currency in its coming five-year plan. The city's deposits in the currency more than tripled to 407.7 billion yuan in the six months through February, the Hong Kong Monetary Authority data show.
"Right now the market is testing the yuan but once they get used to it I expect more IPOs," said Chan, adding that there will be no regulatory limits on volume of issuance. "It's whether companies believe they can get a better valuation."
Li's Hui Xian Real Estate Investment Trust sold shares at 5.24 yuan each, the low end of a range marketed to investors, two people with knowledge of the matter said. The REIT will have a forecast yield of 4.26 percent, based on pricing assumptions presented in the firm's share sale document.
Sales of dim sum bonds totaled 24.2 billion yuan this year, compared with 25 billion yuan in the last three months of 2010, according to data compiled by Bloomberg News. Chan said he is working with Chinese regulators on streamlining rules for bringing funds raised back into the country for direct investment purposes. China's Ministry of Finance is also "receptive" to hold more regular issues than the current annual sales, he said.
Chan said Hong Kong has an advantage as an offshore yuan hub because it conducts 70 percent of international trade settlement in the currency.
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