Hong Kong-listed stocks are about to be priced in yuan, giving China’s currency another boost

The central district of Hong Kong.

The central district of Hong Kong.ANTHONY WALLACE/AFP through Getty Photos

  • Hong Kong-listed shares shall be priced in yuan on Monday, giving China’s forex one other increase.

  • Two dozen shares, together with Alibaba and Tencent, shall be traded within the yuan and the Hong Kong greenback.

  • It comes as Beijing tries to internationalize the yuan and problem the US greenback in world finance.

Two dozen Hong Kong-listed shares shall be priced within the yuan on Monday, giving China’s forex one other increase in world finance.

Alibaba and Tencent shall be among the many shares that shall be traded in each yuan and the Hong Kong greenback, which is pegged to the US greenback.

Underneath the so-called Twin Counter Mannequin program, Hong Kong Inventory Exchanges and Clearing (HKEX) hopes to draw abroad traders with yuan holdings and ultimately mainland Chinese language traders, in accordance with Reuters.

Buyers with yuan holdings in international locations like Russia, which has relied closely on China’s forex since being largely shut out of the worldwide monetary system by Western sanction, may be potential members.

HKEX may even launch a market-maker program that is meant to attenuate the value variations between the 2 currencies.

Buyers can select to commerce utilizing Hong Kong {dollars} or yuan, which has seen vital volatility these days. So traders buying and selling with the yuan may restrict conversion and hedging prices.

In actual fact, the yuan is on the lowest in opposition to the US greenback since November amid a disappointing post-COVID financial restoration. And based mostly on the actual efficient change fee in opposition to one other forex basket from the Financial institution of Worldwide Settlements, the yuan is definitely on the lowest since 2014.

The brand new Hong Kong buying and selling program comes as Beijing tries to internationalize the yuan and problem the US greenback’s dominance on the world stage.

For instance, China and Brazil agreed earlier this yr to conduct commerce in their very own currencies and bypass the US greenback, which is the primary forex in worldwide commerce, particularly commodities.

In the meantime, Argentina additionally mentioned it’ll pay for imports from China within the yuan as an alternative of US greenback, and Beijing has been making an attempt to get international locations within the Center East to cost oil in yuan as an alternative of {dollars}.

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