HONG KONG (Commodity Online) : Continuing its efforts to boost the Yuan at international levels, China promised for more leniencies to foreign investors.
The new plan allowed foreign investors to buy mainland shares and bonds, pushing up shares of brokerage stocks listed in Hong Kong.
it underscored Beijing's intent to propel explosive growth in the Hong Kong offshore yuan market and turn the yuan, or renminbi, into a widely-traded currency one day.
In a sign of Beijing's patent currency ambitions, it also concluded the biggest-ever offshore yuan bond deal on Wednesday in Hong Kong, which Li made clear would remain the paramount center for cultivating a yuan market outside China.
foreign owners of yuan can soon buy up to 20 billion yuan ($3.1 billion) worth of yuan-denominated stocks and bonds on the mainland with the renminbi. He did not give an exact launch date for the scheme.
By letting more yuan flow between China and Hong Kong, analysts said China gets room to experiment with a gradual easing in capital controls that may be shaken off in a big way overtime if Beijing chooses to free the yuan.
For investors in the Hong Kong offshore yuan market who can only funnel their yuan into yuan deposits or yuan-denominated bonds for vapid returns of between 0.4-3 percent, analysts say the scheme, also known as "R QFII," gives respite.
While many foreign investors hold the yuan on the assumption it is set to rise, slim returns are a sore point nonetheless, especially since similar yuan investment on mainland China can earn up to 3 percentage points more.
At the heart of Beijing's push to raise the yuan's international profile is a desire to have a currency that matches its growing clout, and the hope of cutting China's reliance on the dollar.
To that end, China wants firms to not just rely on the U.S. currency when settling trade.
China's experiment with using Hong Kong as a place outside the mainland where the yuan can trade, and as a test bed where capital controls can be gradually eased, has met with great success.
Yuan deposits in Hong Kong have surged over seven times to more than half a trillion yuan in less than two years, making it more pressing for banks -- and Beijing -- to give foreign owners of the yuan more attractive investment options.
Below is a list of plans outlined
-- China to launch RMB QFII which would allow foreign investors to invest in mainland securities with initial quota size of 20 billion yuan
-- China to promote Hong Kong as offshore yuan trading center
-- China to further open up services sector to Hong Kong
-- China to expand yuan trade settlement scheme nationwide
-- China to allow Hong Kong firms to directly invest in mainland China using the yuan
-- China to expand Treasury bond sales in Hong Kong
-- China to launch in ETF linked to Hong Kong stocks in mainland China
-- China to let Hong Kong insurers set up branches in mainland China, take stakes in mainland insurance firms
-- China to study possibility of letting Hong Kong participate in China's existing free trade agreements
-- China's flagship West-East gas pipeline to start supplying gas to Hong Kong in 2012
