Hong Kong Exchanges and Clearing Limited (HKEx) welcomes the pending debut next Monday of the first renminbi (RMB)-traded equity security on The Stock Exchange of Hong Kong Limited (the Stock Exchange). It will be the first RMB-traded equity security outside Mainland China and the Exchange's first dual counter equity security.
The placing of RMB-traded shares by Main Board-listed Hopewell Highway Infrastructure Limited (Stock Code: 737) is subject to a number of conditions as set out in the company’s announcement, including the Stock Exchange granting approval for listing of the RMB-traded shares. If the transaction is completed as planned, the company will have RMB-traded shares in addition to its current Hong Kong dollar (HKD)-traded shares, all the shares will be under the dual counter model (under the dual counter model, there are RMB and HKD counters of the same class of shares that trade in RMB and HKD respectively, have different stock codes and short names, and are fully transferable) and the RMB counter will be a Designated Security eligible for short selling (the HKD counter is already a Designated Security eligible for short selling). As a result, borrowing RMB-traded shares and selling HKD-traded shares or vice versa will be regarded as a covered short sale.
"The debut of the first RMB-traded equity security outside Mainland China and our first dual counter equity security will be major milestones in our development of RMB products and will reinforce Hong Kong’s position as a leading offshore RMB centre,"said HKEx Chief Executive Charles Li. "RMB-traded equity securities will be a significant addition to our RMB-traded bonds, ETFs (Exchange Traded Funds) and REIT (Real Estate Investment Trust), as well as our deliverable RMB currency futures."
Mr Li added, "We expect interest in RMB products will continue to grow with the increasing internationalisation of the RMB."
Under the dual counter model, holders of the HKD counter can sell the shares in the RMB counter as a normal long sale, or vice versa. Holders should then transfer the shares on or before the settlement day from one counter to the other counter to ensure settlement in HKSCC can be carried out on T+2 (the second business day after the transaction), the normal securities settlement day.
The market capitalisation and public float of a company with both RMB- and HKD-traded shares will be determined on a combined basis.
HKEx's Trading Support Facility, or TSF, is available for RMB-traded equity securities.
The Stock Exchange's first dual counter, the RMB- and HKD-traded Harvest MSCI China A Index ETF, was listed on 12 October this year. Trading as well as clearing and settlement have been smooth and orderly since the ETF’s listing.
HKEx has issued a circular to its Exchange and Clearing Participants on the trading, clearing and transfer arrangements in relation to the first dual counter equity security.
Exchange Participants are reminded they must be RMB-ready before they can deal in any RMB-traded products, including RMB-traded equity securities, for their clients. Investors who are interested in RMB-traded products should ensure they have an RMB-ready broker.
As with any listing matters, investors with questions about the RMB-traded shares should read the company's announcements on the HKExnews website or the company’s website. Investors with questions about share transferability and arrangements for corporate actions, including dividend payment and currency options, should refer to the company's announcements or consult their brokers, or they may contact the issuer’s share registrar directly.
HKEx has added RMB-traded products to its stock codes and short names allocation plan and updated its Frequently Asked Questions (FAQs) about RMB products. Information about the plan and the FAQs is posted on the HKEx website.
* Both The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing Company Limited are wholly-owned subsidiaries of HKEx.
Note: There are currently 49 RMB-traded products in HKEx’s markets: 42 debt securities, five Exchange Traded Funds, one Real Estate Investment Trust and RMB currency futures.