HK lifts daily yuan conversion limit for cross-border stock link
Print Edition
HONG Kong will lift a daily cap for converting the local currency to the yuan to facilitate a trading link between the city’s bourse and Shanghai’s stock exchange.
Hong Kong’s stock exchange has announced the delayed link-up with Shanghai will start next Monday, which is set to allow around US$3.8 billion a day in cross-border transactions.
It was a move seen as a step toward greater financial liberalization in the world’s second-largest economy.
Hong Kong’s monetary authority chief Norman Chan said yesterday: “The yuan conversion limit for Hong Kong residents of 20,000 yuan (US$3,266) a day will no longer be available ... effective on Monday.”
Analysts say the lifting of the limit will bring easier access to yuan for local residents and encourage investors to use the currency.
“This is a very key technical resolution for the Shanghai-Hong Kong Stock Connect,” said Jackson Wong, Simsen International Financial Group associate director.
“Residents can get cash quickly to buy whatever amount of mainland shares, the hurdle will be cleared,” he said.
Currently, local residents can only convert yuan from Hong Kong dollars worth 20,000 yuan a day. The rule was established in 2004 when the city allowed local banks to accept yuan for deposits.
Chan also said the new arrangement would make it more convenient for locals to buy shares listed in Shanghai and other yuan financial products.
“This will facilitate the launch of yuan investment products by financial institutions in Hong Kong,” he said.
Hong Kong’s leader Leung Chun-ying said the new policy would “further promote the status of Hong Kong as an offshore yuan business center,” according to a statement released by the government.
The new arrangements will coincide with the launch date of the Shanghai-Hong Kong platform next Monday, which will allow international investors to trade selected stocks on Shanghai’s exchange and let Chinese mainland investors buy shares in Hong Kong.
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