Yuan denominated shares in Hong Kong

China, Hong Kong Open Lane to Homebound Yuan

Supervisory authorities and stock exchanges are well-prepared. The Hong Kong Stock Exchange issued a circular September 1 inviting market participants for a simulated trading test September 18, suggesting technical obstacles for yuan-based financial products including stock have been cleared.

The testing began on the heels of circulars issued by the exchange and CSRC urging preparations for trading yuan-based products. Some securities firm executives in Hong Kong have say they're now pushing Chinese companies to make initial public offerings with yuan-dominated shares – and could see their campaign succeed before the end of the year.

Industry sources say the first yuan-based IPO in Hong Kong will likely be launched by a company whose assets are 100 percent in China, since it will be relatively easy to transfer funds back home after the fund-raiser.
Some securities executives have optimistically estimated that half the all stocks on the Hong Kong bourse could be priced, settled and traded in yuan within five years. And studies focusing on a Hong Kong Stock Exchange Traded Funds listing in Shanghai have resumed.

The United States Congress ought to be thinking about the financial competition coming from Hong Kong and Shanghai, rather than the value of the currency. The patient has a severed limb and the doctor is debating whether to use aspirin or ibuprofen to treat the pain.
China Plans to Introduce Credit-Default Swaps by Year-End, Official Says

Investors in the derivatives will be required to own the underlying risk, Shi said today in an interview with reporters in New York. China plans to limit the amount of leverage used in the contracts to avoid the kind of financial crisis faced in the U.S. two years ago, he said.

“We believe CDS is a neutral risk-management tool,” Shi said. “It is neither evil nor good.”

Private swaps complicated efforts to solve the credit crisis in the U.S. when regulators and market users couldn’t easily determine how interconnected banks had become through trading contracts.

China also expects to open its debt markets further to foreign companies, saying the prospects for their selling debt will gradually improve during the next 3 to 10 years to “extraordinarily great” from “promising,” Shi said.