(Yicai) July 9 -- Shares traded on the Chinese yuan counter of the Hong Kong Stock Exchange will soon be included in the Stock Connect, the mutual market access scheme between the special administrative region and the Chinese mainland, according to the head of the SAR’s Securities and Futures Commission.

“We expect that more enterprises will consider listing under the yuan counter after getting a clear timeline,” SFC Chief Executive Officer Leung Fung Yee said in a speech delivered at the Bond Connect Anniversary Summit yesterday. “Driven by southbound capital, yuan-denominated trading in the Hong Kong stock market is expected to grow steadily.”

The SFC is working closely with mainland regulators to add the yuan counter to the Stock Connect, she said, adding that technical preparations are progressing smoothly, and related rules will be announced to investors soon.

The HKEX introduced a dual counter model to the secondary market for trading and settlement purposes in June 2023. It allows investors to trade the shares of Hong Kong-listed firms in Hong Kong dollars or in yuan. The first 24 participants included Tencent Holdings, Alibaba Group Holding, and JD.Com.

Since the model’s launch, the volume of yuan shares traded on the HKEX has remained relatively low. As of June 18, the total for the 24 stocks was CNY49.2 billion (USD6.9 billion) on the yuan counter, compared with HKD22.5 trillion (USD2.9 trillion) on the Hong Kong dollar counter, per official figures.

The yuan counter’s inclusion in the Stock Connect will enable mainland and Hong Kong investors to trade shares listed on each other's exchanges through local securities firms, boosting market liquidity, an analyst told Yicai. Large-cap stocks like Tencent and Alibaba are expected to benefit first, the person added.

As of May 31, the total net inflow of mainland funds into the HKEX via the Stock Connect had reached HKD4.4 trillion (USD560.5 billion), with the transactions accounting for about 23 percent of the bourse's total turnover, according to the latest data from the SFC.

Editors: Dou Shicong, Futura Costaglione