(Yicai Global) June 9 -- The Hong Kong Stock Exchange will introduce share trading in the Chinese yuan on June 19 with the launch of the HKD-CNY Dual Counter Model, that will allow investors to trade Hong Kong dollar and yuan stocks separately so as to narrow the spread, The Paper reported today, citing the head of Hong Kong’s Financial Services and Treasury Bureau.

Around 20 companies have applied to join the ‘dual counter’ scheme, and they account for around 40 percent of daily trading volume, Christopher Hui said at the 14th Lujiazui Forum today.

The strengthening of the US dollar has affected the exchange rate with the yuan. Different regions including Asia are considering diversifying their asset classes or allocations, and the redback is a natural choice, he said.

The Hong Kong bourse is promoting the yuan as part of the diversification of assets. Just a few weeks ago, it issued CNY15 billion (USD10.40)-worth of 10-year yuan-denominated treasury bonds at an interest rate of 3.3 percent, much lower than that of US dollar and euro bonds. When the yuan interest rate is low, it is a good opportunity to increase holdings of yuan securities, he added.

“Next, we will connect the yuan counter to the Shenzhen-Hong Kong Stock Connect and Shanghai-Hong Kong Stock Connect mechanisms, to allow investors on the mainland to directly buy Hong Kong stocks in yuan,” Hui said. At present, investors are quoted in Hong Kong dollars and they pay in yuan at a currency conversion rate.

“Our goal is to achieve carbon neutrality by 2050,” Hui said. We will develop green bonds, and we hope to better fund and support green projects in Hong Kong through these bonds.

"We aim to promote Hong Kong finance as a platform to absorb international capital and promote green development internationally. We have a green carbon credit trading platform to encourage participants from the mainland to trade carbon credits,” Hui said.

Editor: Kim Taylor