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Stocks listed in Hong Kong will be priced in yuan on Monday, giving fresh impetus to the Chinese currency.
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Two dozen stocks, including Alibaba and Tencent, will trade in yuan and Hong Kong dollars.
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It comes as Beijing attempts to internationalize the yuan and challenge the US dollar in global finance.
Two dozen Hong Kong-listed stocks will be priced in yuan on Monday, giving the Chinese currency another boost in global finance.
Alibaba and Tencent will be among the stocks that will trade in both yuan and Hong Kong dollars, which are pegged to the US dollar.
According to Reuters, under the so-called double-counter model program, Hong Kong Stock Exchanges and Clearing (HKEX) hopes to attract foreign investors holding yuan holdings and possibly mainland Chinese investors.
Investors with yuan holdings in countries like Russia, which is heavily dependent on the Chinese currency since it was largely shut out of the global financial system by Western sanctions, could also be potential participants.
HKEX will also launch a market maker program intended to minimize price differences between the two currencies.
Investors can choose to trade in Hong Kong dollars or yuan, which have seen significant volatility lately. Thus, investors trading with the yuan could limit conversion and hedging costs.
In fact, the yuan is at its lowest against the US dollar since November amid a disappointing post-COVID economic recovery. And based on the real effective exchange rate against another basket of currencies from the Bank for International Settlements, the yuan is actually at its lowest since 2014.
Hong Kong’s new trade agenda comes as Beijing attempts to internationalize the yuan and challenge the US dollar’s dominance on the world stage.
For example, China and Brazil agreed earlier this year to trade in their own currencies and bypass the US dollar, which is the primary currency for international trade, especially commodities.
Meanwhile, Argentina has also said it will pay for imports from China in yuan instead of US dollars, and Beijing has tried to get Middle Eastern countries to price oil in yuan at the instead of dollars.
Read the original article on Business Insider