By CHESTER YUNG And FIONA LAW
HONG KONGâ€"China plans to unveil new measures aimed at boosting the flow of its currency between Hong Kong and the mainland, with an announcement planned to coincide with President Hu Jintao's three-day visit to the city beginning Friday, people familiar with the matter said.
Among the initiatives, Hong Kong and China are discussing plans to relax the 20,000 yuan (US$3,142) daily conversion limit for Hong Kong residents, the people said Tuesday. One of the people said Beijing will likely introduce plans to relax requirements for companies seeking to join a program that allows foreign investors to use yuan raised offshore to buy mainland Chinese securities, known commonly as the Renminbi Qualified Foreign Institutional Investor, or RQFII.
The moves would mark yet another step by Beijing to internationalize its tightly controlled currency, as well as further strengthen Hong Kong's role as the main offshore yuan trading center.
The person also said that existing guidelines on RQFII investments will be adjusted. Currently, at least 80% of RQFII funds must be invested in fixed-income products, while not more than 20% can be used for equities investments. The person said Beijing plans to relax the 20% limit, without providing more specifics.
China has been looking to channel money from institutional investors, both domestic and foreign, into the mainland stock market to help support the slowing economy as the country prepares for a leadership transition this year.
Thomas Poon, head of business planning and strategy for HSBC Holdings PLC in Hong Kong, said the potential new measures could facilitate the development of more yuan-denominated investment products in Hong Kong.
"Though the offshore yuan pool won't likely surge because of this, the new measures will possibly help position Hong Kong as a wealth-management center for the yuan, with no constraints for retail investors to convert their money into the yuan," he said.
The city's yuan market has grown over the past two years. Yuan deposits in Hong Kong jumped fivefold to a high of 627.3 billion yuan in November from July 2010, when Beijing relaxed key rules for the use and circulation of the yuan in the city. However, deposits fell to 552.4 billion yuan at the end of April as expectations for appreciation of the currency faded.
Mr. Hu is scheduled to stay until Sunday, when he will attend the 15th anniversary celebration of the former British colony's handover to China, as well as to officiate the inauguration of Leung Chun-ying as the city's new chief executive.
The people familiar with the matter also said that plans to launch exchange-traded funds linked to Hong Kong and China-traded sharesâ€"which will allow investors in the mainland and Hong Kong to access stocks in each others' marketsâ€"will be announced during Mr. Hu's visit.
Write to Chester Yung at chester,yung@dowjones.com and Fiona Law at fiona.law@dowjones.com
No comments:
Post a Comment