Yuan-denominated shares launched in HK

Hopewell Highway Infrastructure Limited (HHI), a Hong Kong-listed infrastructure company, floated 120 million shares priced in renminbi on the Hong Kong Stock Exchange Monday, according to a notice issued that day from HHI, marking the launch of the world's first publicly traded yuan-denominated equity outside of the mainland market.

HHI raised 386.40 million yuan ($61.89 million) in the primary market on October 24 after placing another 120 million new shares priced at 3.22 yuan directly with investors in Hong Kong, with the money raised intended to shore up the company's construction capital.

HHI's new public offering is supported by the Hong Kong Stock Exchange's "dual tranche and dual counter" framework that allows investors to convert their HK dollar-traded shares into RMB-traded shares, and vice versa, according to the company's announcement.

The arrival of yuan-denominated shares in Hong Kong signals the eagerness of the region's government to promote the yuan as a global currency and the growing demand for the yuan among overseas investors, experts told the Global Times.

As a vital area connecting the mainland with the global financial market, Hong Kong has become a major offshore yuan hub to help internationalize the mainland currency and local financial authorities have been working steadily over the past few years to pave the way for more yuan investment products to boost the currency's liquidity in the local market, Zhou Yu, director of the Research Center of International Finance at the Shanghai Academy of Social Sciences, told the Global Times.

Prior to HHI's issuance of RMB shares, 49 yuan-denominated products - including bonds, exchange traded funds and currency futures - had been developed for the Hong Kong market since 2007, according to information from the region's stock exchange.

Yuan Gangming, a scholar with the Center for China in the World Economy at Tsinghua University, echoed Zhou's sentiments and told the Global Times that a yuan stock listing in Hong Kong will help meet the growing demand for yuan-denominated investment products offshore, especially as the yuan continues to strengthen against the US dollar in the world market following a third round of quantitative easing from the US Federal Reserve.