Hong Kong remove renminbi conversion limit to boost stock investment

The daily renminbi (RMB) cap of 20,000 on conversion limits for Hong Kong residents will no longer apply from November 17th when a landmark scheme to link the city's stock market with Shanghai is launched, designed to boost investment flows into China's stock market.

Hong Kong remove renminbi conversion limit to boost stock investment

The daily renminbi (RMB) cap of 20,000 on conversion limits for Hong Kong residents will no longer apply from November 17th when a landmark scheme to link the city's stock market with Shanghai is launched, designed to boost investment flows into China's stock market.

"The removal of the daily conversion limit will enable Hong Kong residents' participation in the Shanghai-Hong Kong stock connect as well as other investments and transactions denominated in the yuan," Norman Chan, chief executive of the Hong Kong Monetary Authority, told reporters.
He states that this move will allow banks will square the positions arising from RMB conversion conducted with Hong Kong residents in offshore markets and the usual conversion for onshore conversion will no longer be applicable.

There are hopes the removal of the conversion limits will bring more convenience for local residents to participate in the Shanghai-Hong Kong Stock Connect and other RMB financial transactions. Residents can buy or sell RMB more freely.

A yuan cash shortage in Hong Kong may be intensified in the initial days of the stock-connect launch due to high demand for comparatively undervalued Shanghai listed shares, analysts say.


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