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Hong Kong Accelerates Yuan Trading on Southbound Stock Connect for Internationalization Push
Hong Kong's securities regulator targets July 1 for a yuan trading counter addition to the Southbound Stock Connect, allowing direct yuan settlement for mainland investors buying Hong Kong shares. This move strengthens Hong Kong’s role as an offshore…
Expanding Yuan Settlement in Hong Kong Markets
Hong Kong's securities regulator plans to integrate a yuan trading counter into the cross-border investment channel for mainland Chinese investors by July 1. This initiative marks a further step in the city's efforts to advance the Chinese currency's international standing.
The Securities and Futures Commission (SFC) announced this measure on Wednesday, outlining it as part of a strategic action plan. The plan supports Hong Kong’s first five-year development strategy and Chief Executive John Lee Ka-chiu’s 2026 policy address.
SFC chairman Kelvin Wong Tin-yau stated that Hong Kong seeks to become a preferred platform for yuan asset allocation and risk management, not merely a hub for yuan products. Strengthening the ecosystem for yuan-settled products is a key priority for the SFC.
Mainland Chinese investors utilizing the southbound Stock Connect scheme currently convert their yuan into Hong Kong dollars to purchase Hong Kong-listed shares. A yuan trading counter would remove this step, enabling direct buying and settlement in yuan.
The financial community in Hong Kong has anticipated the inclusion of a yuan counter via the southbound Stock Connect since the launch of the dual-counter model in June 2023.
SFC CEO Julia Leung Fung-yee affirmed the regulator’s goal to expand the range of yuan-denominated products. Leung stated, “Our goal is to incorporate a yuan trading counter into the southbound Stock Connect scheme, and we aim to implement this by July 1 of next year.”
Leung had previously indicated in June of the prior year that the SFC expected this inclusion by the end of 2025. The revised timeline suggests a possible policy gesture from Beijing, potentially timed ahead of the 30th anniversary of Hong Kong’s return to Chinese rule on July 1, 1997.
Reinforcing Hong Kong's Offshore Yuan Role
Chief Executive Lee’s first five-year plan for Hong Kong includes commitments to bolster the city's standing as an international finance center. This involves enhancing its position as a global offshore yuan hub, alongside its roles as an international asset and wealth management center and a risk management center.
As the world's largest offshore yuan pool, Hong Kong recorded USD 139 billion in yuan-denominated loans and over USD 149 billion worth of new bond issuance last year.
The SFC intends to promote more exchange-traded funds and other asset classes, such as gold, currency, and commodity futures products, for denomination, settlement, and trading in yuan, according to Leung.
Carlson Tong Ka-shing, chairman of Hong Kong Exchanges and Clearing, observed that the SFC’s plan provides a clear framework for market development. He noted it reinforces Hong Kong’s position as a leading international financial center and enhances its unique role in mainland China’s financial opening-up.
Beyond expanding the yuan ecosystem, Wong highlighted two other priorities for the SFC: deepening capital links with mainland China and overseas markets, and improving the efficiency of Hong Kong’s capital markets.
Leung also mentioned the regulator's aim to launch a new connect scheme for cross-border trading of real estate investment trusts in the first half of 2027.
The strategic plan encompasses 29 measures for implementation within a year and an additional 22 longer-term initiatives.
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