HONG KONG, China: The continuing march of the internationalization of China’s currency will see some two dozen stocks being listed on the Hong Kong stock market in Chinese yuan, rather than US dollars.
Chinese companies Alibaba and Tencent are among the 24 stocks to be traded in both yuan and the Hong Kong dollar on the Hong Kong stock exchange. Of note, offshore yuan deposits in Hong Kong banks have reached some 833 billion yuan ($117 billion).
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Industry observers note that trading in yuan will allow Beijing to expand the use of yuan outside China. Also, it will slow capital leaving the country, in response to US dollar fluctuations.
China is pushing yuan internationalization to avert geopolitical risks and reduce reliance on the dollar, and for that purpose you need wider use of the Chinese currency, said Ding Wenjie, strategist with Global Capital Investment at China Asset Management Co.
Ding called the expansion of the yuan in the stock market a major milestone and expects the yuan to be used in overseas asset pools denominated in yuan in the future.
The use of the yuan on the stock market follows yuan used as payment for Chinese oil purchases in the Middle East, to commodities purchased from partners Brazil to Russia.
Officials note that the U.S. dollar remains the most-used global currency, accounting for 42% of global payments. While the yuan’s share is just 2.29%, it has increased from 1.95% in 2021.
Industry observers took note in June when Pakistan paid Russia in yuan for crude oil.
When a currency is internationalized, it’s not only used in trade, physical goods, or services. It also has to be parked in investment vehicles, said Dong Chen, Head of Asia Macro-economic Research at Pictet Wealth Management, according to Reuters.
China News Network / ABC Flash Point News 2023.
Officials note that the U.S. dollar remains the most-used global currency, accounting for 42% of global payments. While the yuan’s share is just 2.29%, it has increased from 1.95% in 2021.