Hong Kong to boost secondary market for yuan-denominated equities

By Kim Young-gyo
HONG KONG, May 16 (Yonhap) -- Hong Kong will boost the secondary market, enabling investors to buy yuan-denominated equities, the bourse operator here said Monday, in line with China's move to expand the use of its currency.
Hong Kong Exchanges and Clearing Ltd. (HKEx) said it will launch a special facility in the second half of this year to encourage trading in yuan-denominated shares in the secondary market.
The secondary market refers to the financial market where previously issued securities and financial instruments such as stock, bonds, options and futures are bought and sold.
"The Trading Support Facility (TSF) will serve as a backup facility to enable investors to buy yuan-denominated shares in the secondary market with Hong Kong dollars if they have difficulty in obtaining the yuan," HKEx said.
"The yuan will be sources from one or more banks in Hong Kong and prices at commercial rates."
The bourse operator added that when the investors sell the yuan-denominated shares they bought with yuan from the TSF, they will have to return the yuan to the facility for the equivalent amount of Hong Kong dollars.
Trading in yuan-denominated shares is seen as significant for the further development of the offshore yuan market in Hong Kong.
Last month, Hui Xian Real Estate Investment Trust (REIT), controlled by Hong Kong tycoon Li Ka-shing, made a yuan-denominated initial public offering, the world's first outside mainland China.
Currently, three yuan-denominated debt equities are listed and available for trading on the Hong Kong exchange.