HKEX Major Announcement: RMB-Denominated Stock Trading Counter Launches in September
On July 29, 2026, Hong Kong Exchanges and Clearing Limited (HKEX) officially announced that it will launch a pilot program for RMB-denominated stock trading counters this September. The first batch of stocks includes 10 blue chips such as Tencent Holdings (00700.HK), Meituan-W (03690.HK), and Ping An Insurance (02318.HK). This move is seen as a key milestone for Hong Kong to further deepen the offshore RMB market and enhance the attractiveness of Hong Kong stocks.
HKEX Chief Executive Officer Chen Yiting said at the press conference: 'The launch of the RMB-denominated counter will allow investors to directly buy and sell Hong Kong stocks in RMB without having to convert to Hong Kong dollars, greatly reducing exchange rate risk and transaction costs. We expect this to attract more northbound mainland capital and international RMB asset allocation, increasing the depth of the Hong Kong stock market.'
Background: RMB Internationalization and Hong Kong Stock Liquidity Bottleneck
For a long time, the Hong Kong stock market has been dominated by Hong Kong dollar-denominated trading. Mainland investors using the Stock Connect to trade Hong Kong stocks must first convert RMB to Hong Kong dollars, facing exchange rate fluctuations, conversion costs, and time delays. Although the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect mechanisms have been operating for years, net northbound capital inflows have been volatile, and Hong Kong stock liquidity is not dominant globally. In 2025, the average daily turnover of Hong Kong stocks was about HK$120 billion, while the A-share market's average daily turnover exceeded RMB 1 trillion, a significant gap.
On the other hand, RMB internationalization is accelerating. By the end of 2025, offshore RMB deposits reached RMB 1.5 trillion, with Hong Kong, as the world's largest offshore RMB center, holding about RMB 800 billion. However, RMB-denominated financial products are still mainly bonds and certificates of deposit, with stock products scarce. HKEX's launch of RMB-denominated stock trading counters is expected to fill this gap and provide a new investment channel for offshore RMB.
Policy Details: Dual Counter Model and Market Maker Mechanism
According to HKEX's announced plan, the RMB-denominated counter will adopt a 'dual counter' model: each selected stock will have both a Hong Kong dollar counter and a RMB counter, with prices independent but convertible. Investors can buy stocks in RMB through designated brokers or convert Hong Kong dollar counter stocks to RMB counter stocks.
To ensure liquidity, HKEX will introduce a market maker mechanism, with Bank of China (Hong Kong), HSBC, and Standard Chartered serving as the first batch of market makers, providing continuous quotes for the RMB counter to keep bid-ask spreads within a reasonable range. Additionally, HKEX will negotiate with mainland regulators to include RMB counter stocks in the Stock Connect trading scope, allowing mainland investors to buy directly in RMB without conversion.
Market Impact: Liquidity Boost and Sector Rotation
After the announcement, the Hong Kong stock market reacted positively. As of the close on the 29th, the Hang Seng Index edged down 0.2% to 18,750 points, but the tech index rose 0.8% against the trend, with Tencent and Meituan up 1.2% and 1.5% respectively. Analysts believe the RMB-denominated counter will primarily benefit the following sectors:
- Blue chips in the first batch: Such as Tencent, Meituan, and Ping An Insurance, will directly benefit from new buying and improved liquidity. It is estimated that the average daily turnover of these stocks' RMB counters could reach 10%-20% of their Hong Kong dollar counters.
- Stocks favored by mainland capital: Sectors like consumer, healthcare, and new energy, which are familiar to mainland investors, may attract more northbound capital allocation due to the removal of currency conversion barriers.
- HKEX itself: As a trading platform, with increased trading volume, HKEX's trading and settlement fee income will rise, benefiting its stock price.
Nomura Securities issued a research report stating that the RMB-denominated counter is expected to bring an additional 5%-10% in average daily turnover to Hong Kong stocks over the next 12 months, while reducing the valuation discount. Currently, the Hang Seng Index's P/E ratio is about 9.5 times, significantly lower than the S&P 500's 21 times. If liquidity improves, there is considerable room for valuation repair.
Investor Guide: How to Participate in RMB Counter Trading
For ordinary investors, participating in RMB counter trading requires attention to the following points:
- Broker account: Currently, only a few brokerages (such as BOCI Securities, Futu Securities, and Tiger Brokers) support RMB counter trading. Investors need to confirm whether their broker has enabled this function.
- Exchange rate risk: Although stocks are priced in RMB, company earnings are mainly in Hong Kong dollars or US dollars; exchange rate fluctuations may still affect actual returns. In the long term, RMB exchange rate trends and stock fundamentals need to be considered together.
- Spread arbitrage opportunities: Under the dual counter model, prices between the two counters may diverge. The Hong Kong Securities and Futures Commission has restricted market makers' arbitrage activities, but ordinary investors can watch for arbitrage opportunities, though liquidity risks should be noted.
Outlook: From Hong Kong Stocks to RMB Asset Pricing Power
This reform by HKEX is not only a technical innovation but also an important step in competing for RMB asset pricing power. Currently, the pricing center for RMB assets is mainly in Shanghai and Shenzhen, but the Hong Kong stock market, as a gateway for international capital in and out of China, can attract global funds to directly allocate RMB stocks through the RMB-denominated counter, bypassing QFII/RQFII quota restrictions.
HKEX expects that by the end of 2027, the number of RMB-denominated stocks will expand to 100, covering over 80% of the market capitalization of the Hang Seng Composite Index. Additionally, HKEX is researching the launch of RMB-denominated derivatives, such as index futures and options, to further improve the product ecosystem.
Overall, the launch of the RMB-denominated stock trading counter is the most significant institutional change for the Hong Kong stock market since the launch of the Shanghai-Hong Kong Stock Connect in 2014. In the short term, it will improve market liquidity and trading convenience; in the long term, it will help consolidate Hong Kong's position as a global offshore RMB center and provide new impetus for RMB internationalization. Investors should closely monitor the market reaction after the official launch in September and the timeline for inclusion in the Stock Connect.
