HKEX shares on Wednesday plunged over 10 percent when the afternoon session began and closed down 8.78 percent. The Hang Seng Index shed nearly 3 percent to finish below 30,000 points. Photo: cnsphoto

 
The working group of the Hong Kong Special Administrative Region (SAR) has completed a feasibility study for stocks traded via the southbound legs of the Hong Kong-mainland stock link program denominated in yuan.

"As regards allowing stocks traded southbound via the Stock Connect to be denominated in yuan, the working group has completed the feasibility study. As a next step, we will discuss it with the regulatory authorities and relevant organizations in the Chinese mainland, and the HKEX will be in touch with issuers and relevant sectors," said Christopher Hui Ching-yu, secretary for financial services and the treasury of the Hong Kong SAR, on Monday at a special meeting on estimates of expenditure for financial services and key work areas.

The southbound legs of the Hong Kong-mainland stock link mechanism allow capital to flow from A-share markets in Shanghai and Shenzhen to overseas markets.

The Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect established a two-way trading link between the Shanghai Stock Exchange, Shenzhen Stock Exchange and HKEX. 

"The HKSAR government is also prepared to roll out supporting measures such as waiving the stamp duty on stock transfers paid by market makers in their transactions, so as to increase market liquidity and facilitate trading," said Hui.

According to Hui, yuan-dominated southbound trading could strengthen Hong Kong's function as an offshore yuan business hub and enhance the offshore yuan business ecosystem in Hong Kong. 

The initiative is among the three major fronts for promoting Hong Kong's market development. The other two are assisting with the seizing of new opportunities in the financial market and exploring further development while consolidating existing advantages, said Hui.

Hui also said that the Shenzhen municipal government in South China's Guangdong Province has issued offshore yuan municipal government bonds totaling 5 billion yuan ($784.9 million) in Hong Kong, including green bonds.

"This is the first time a municipal government has issued bonds in Hong Kong. Based on this successful issuance, we will continue to encourage the issuance of more diversified yuan wealth management products and bonds in Hong Kong, thereby promoting the internationalization of the yuan," said Hui.

"In the coming year, to enhance Hong Kong's status as an international financial center, we will focus on safeguarding Hong Kong's financial stability and continue to enhance financial co-operation with the Chinese mainland by introducing a series of new initiatives for promoting market development under the National 14th Five-Year Plan," Hui noted.