June 21, 2019 / 10:23 AM / a month ago

HKMA allows onshore yuan hedging for northbound Stock Connect

HONG KONG, June 21 (Reuters) - The Hong Kong Monetary Authority (HKMA) issued guidance on Friday to allow investors using the cross-border Stock Connect trading scheme in the city to hedge yuan exposure using the onshore exchange rate for the first time.

Investors on ‘northbound trading’ - tapping mainland Chinese stocks from Hong Kong - have to settle their transactions in offshore yuan, HKMA said in a statement on its website.

“The enhanced currency conversion arrangement will offer more diversified choices to investors, and increase the convenience and attractiveness of Stock Connect, thereby reinforcing Hong Kong’s role as the intermediary for capital flowing into and out of the mainland,” Norman Chan, HKMA’s chief executive, said in the statement.

Stock Connect, launched in 2014, allows offshore investors wider access to onshore stocks, and has helped faciliate the inclusion of Chinese equities in global indexes.

Reporting by Noah Sin

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