Lukewarm start for dual counter

The dual currency counter model, allowing investors to trade shares in local currency or yuan, recorded a lukewarm turnover of 162 million yuan (HK$177 million) for the 24 yuan-denominated stocks on the first day.

That was only 0.17 percent of yesterday's total turnover.

It compared with a turnover of HK$29.2 billion in 24 listed stocks in Hong Kong dollars, data from Hong Kong Exchanges and Clearing showed.

It is believed that most of the trading was made by local investors who hold offshore yuan.

But the government expects to include yuan-denominated stocks in the Stock Connect scheme linking the city with the mainland, which will allow mainland investors to directly use onshore yuan for trading.

Among the first batch of 24 companies, China Mobile was the most actively traded stock, with a turnover of 55.2 million yuan on the yuan counter. Trading in its Hong Kong dollar counter posted a turnover of HK$875 million.

Tencent was the second most active stock and saw a turnover of 36.6 million yuan. This was followed by Ping An Insurance, oil giant CNOOC and food delivery platform Meituan.

Auto manufacturer Great Wall Motor saw the least turnover, which was below 17,000 yuan.

The yuan counter saw stocks listed under a different, five-digit stock code that begins with 8. And the first batch took up more than a third of the total market capitalization on the exchange and accounted for about 40 percent of the average daily turnover.

Meanwhile, nine financial firms have so far been named as market makers to conduct liquidity-providing activities for transactions.

Financial Secretary Paul Chan Mo-po said at the launch ceremony he believes the new model will drive up trading, improve efficiency of stock pricing and enhance yuan liquidity.

Chan said international demand for yuan will only increase partly thanks to recent changes in geopolitical tensions and Hong Kong should play a key role in yuan internationalization.

HKEX chief executive Nicolas Aguzin said the model will help broaden the range of yuan-denominated investment products.

By April, the city held 833 billion yuan worth of offshore yuan deposits, the world's largest offshore yuan pool.

caroline.zheng@singtaonewscorp.com