BOCHK predicted to be the biggest gainer in HKMA's recent abolishing move

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Following the recent announcement of the HKMA that it is abolishing the daily conversion quota of RMB20,000 per person for Hong Kong residents and that banks would be allowed to lend RMB to Hong Kong residents, it seems like one bank has the most to gain from the development.

According to a research note from Barclays, among all the Hong Kong banks, it believes BOCHK will be the biggest beneficiary for the removal of the RMB daily currency-conversion cap.

This is because, Barclays said, BOCHK is the sole Clearing Bank for RMB business in Hong Kong.

Further, BOCHK has the most RMB deposits in Hong Kong, which should benefit from increased RMB-HKD conversion as well as potential RMB stock margin lending post the launch of Shanghai-Hong Kong Stock Connect.

Here's more from Barclays:

Hong Kong residents will be able to convert unlimited RMB at CNH rate and borrow RMB from Hong Kong banks: Norman Chan, Chief Executive of the Hong Kong Monetary Authority, announced that the daily conversion quota of RMB$20,000 per person for Hong Kong residents will be lifted from November 17, 2014. Local residents will be allowed to exchange an unlimited amount of RMB at the offshore rate (CNH).

The daily currency-conversion limit of RMB$20,000 has existed since 2004 and currently Hong Kong residents can only convert RMB at onshore rate (CNY). Moreover, banks would also be allowed to lend RMB to Hong Kong residents.

Daily repatriation limit remains unchanged: The transfer of RMB to onshore accounts will still be subject to China’s daily repatriation limit of RMB 80,000 per person.

Support Shanghai-Hong Kong Stock Connect: The removal will help support Shanghai-Hong Kong Stock Connect, which will also commence on November 17, 2014.

According to the information provided by HKEx and Shanghai Stock Exchange (SSE), there are 568 SSE securities eligible for the Shanghai-Hong Kong Stock Connect and there are 268 Stock
Exchange of Hong Kong (SEHK) securities eligible for the Connect.

The eligible stocks in SSE and SEHK accounted for 80% and 78% of average daily turnover, respectively. The trading of SEE securities and SEHK securities are both subject to an aggregate quota and daily quota.

The aggregate quota for SEE securities and SEHK securities are RMB300bn and RMB250bn, respectively, while the daily quota for SEE securities and SEHK securities are RMB13bn and RMB10.5bn respectively.