Monetary Authority Chief Executive Joseph Yam has welcomed the allowance of Tianjin Binhai New Area investors to invest directly in Hong Kong's securities market.

In his Viewpoint column published today on the authority's website, Mr Yam said although the pilot scheme is more restrictive than the authority envisioned, it does not rule out a move towards freer arrangements in future.

"Whether or not the scheme will generate a significant increase in demand for foreign currencies and a relief of market pressures for the exchange rate to appreciate remains to be seen," he said.

"Let us not forget that these are the most important objectives, although one should not play down the significant benefits the scheme will bring to the maintenance of the status of Hong Kong as an international financial centre."

Mr Yam said the scheme will help Hong Kong's financial stability, particularly at a time of great volatility and nervousness in global finance.