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The Business and Professionals Alliance for Hong Kong (BPA) today (Nov 12) welcomes the decision by the Hong Kong Monetary Authority (HKMA) to scrap the Chinese Yuan 20,000 daily quota imposed on Hong Kong residents who wish to purchase the Renminbi (RMB). BPA Chairman, Mr Andrew Leung Kwan-yuen, believes that such a timely arrangement would enhance market liquidity in the trading of the RMB.
The BPA has called for the removal of the conversion limit before the launch of cross-border stock trading. “The removal of the daily exchange limit will be favorable to capital flows and in bolstering investor confidence in the A-Share market. In addition, the move will facilitate participation by local investors in the Shanghai-Hong Kong Stock Connect and the trading of other RMB-denominated products,” said Mr Leung.
Under the new arrangement, limits on retail transactions for RMB-denominated loans, financing, and currency exchange have also been removed. Mr Leung points out that this would provide greater flexibility to financial institutions when settling positions on RMB conversions conducted offshore. The relaxation would also be beneficial to the promotion of RMB-based asset management products, as well as the growth of retail loans. He adds that the regulatory change would also strengthen Hong Kong’s position as an international financial centre and would further consolidate the SAR’s role as an offshore hub for RMB business. Mr Leung believes that Hong Kong would continue to contribute to the internationalization of the RMB, the opening of China’s capital account, and the country’s economic reforms.