Analysts expect a new yuan trade counter added to the Hong Kong Tracker Fund (2800) to be welcomed by mainland investors, but is unlikely to boost market sentiment as the most of them will adopt a wait-and-see attitude in the face of the current volatility.
The city’s largest exchange-traded fund said on Friday it would allow investors to trade yuan in the secondary market starting Sept. 19, the same day the fund changes managers.
Primary market trades will continue to be settled in Hong Kong dollars.
The lot size of 500 units remains the same for units traded in yuan while the stock code for the units is 82800.
The yuan trading desk will offer mainland investors an easier way to invest in TraHK, which is designed to track the Hang Seng index, but it will see little short-term trading growth due to continued weakness. sentiment in the local stock market, said Andrew Wong Wai-hong, chairman and CEO of Anli Securities.
TraHK’s manager will also be replaced by Hang Seng Investment Management next month by State Street Global Advisors Asia, which has managed the fund for more than 20 years.
The subsidiary of Hang Seng Bank (0011) said it will reduce management fees and trust fees.
This came as four stocks, including Baidu (9888) and China Shenhua Energy (1088), will be added to the HSI in the latest reshuffle.
With Chow Tai Fook Jewelery (1929) and Hansoh Pharmaceutical Group (3692), the city’s benchmark constituents will increase from 69 to 73 from September 5.
Among four stocks, Baidu and Shenhua are expected to have the largest weighting, accounting for 0.65% each, while CTF will hold 0.26% and Hansoh Pharma will take 0.15%.
The weighting of HSBC (0005) and AIA (1299) will drop to 8% and 7.61%, respectively.
Shenhua and CTF could see a near-term price boost as their inclusion was a bit unexpected, said Kenny Ng Lai-yin, securities strategist at Everbright Securities International.