(Yicai) Jan. 31 -- Hong Kong is in negotiations with Chinese regulators to speed up the approval of mainland companies to list on the Hong Kong Stock Exchange, the financial secretary of the special administrative region said at a forum yesterday.

One of the key initiatives is the inclusion of Chinese yuan trading counters under the Southbound stock connect scheme, which will allow mainland investors to purchase Hong Kong stocks in onshore yuan, reducing the risk of exchange rate conversions, Paul Chan said at the 2024 Hong Kong Capital Market Forum.

The inclusion of more international companies in the Southbound scheme will allow firms to receive both Chinese yuan and other currencies, which will help their liquidity and valuation, Chan said.

It follows an announcement made by Wang Jiangjun, vice chairman of the China Securities Regulatory Commission, at an investment summit held in Hong Kong in November last year that China is preparing to roll out new rules for overseas listings that will make it easier for mainland firms to go public in Hong Kong and deepen ties between the two stock markets.

Already there are signs of more mainland firms being accepted to list in Hong Kong. As of Jan. 26, 13 such companies had their applications acknowledged, more than before, according to the CSRC. And 59 companies are preparing to file.

Hong Kong’s IPO market used to be one of the biggest in the world, but it has since fallen out of the top five and listings are now the lowest they have been in the past two decades. Last year the number of listings plunged 24 percent from the year before to 70, and the amount of funds raised plummeted 59.1 percent to HKD37.7 billion (USD4.8 billion), according to Choice.

Hong Kong stocks are also in liquidity trouble. The average daily turnover in December last year was half that of 2021 at HKD98.5 billion (USD12.6 billion).

Editor: Kim Taylor