The Shanghai-Hong Kong Stock Connect program, which began with much fanfare on Nov 17, is widely expected to boost demand for the renminbi in Hong Kong and, as a result, the size and influence of the offshore market.

“The ‘through train’ not only connects the Chinese mainland with the global financial center, but also consolidates Hong Kong’s status as the major offshore renminbi center,” said Hong Kong Chief Executive Leung Chun-ying at a ceremony at the stock exchange in Hong Kong to mark the start of Stock Connect.

Leung’s words were seen as a reflection of Hong Kong’s goal to be an irreplaceable center for offshore yuan as the Chinese mainland pursues financial reform based on the opening of the capital account.

A large and vibrant offshore market, such as the one in Hong Kong, can greatly facilitate that process, analysts said.

Stock Connect has opened channels for more capital flows between Hong Kong and Shanghai and removed many restrictions on financial creativity. More than an investment tool, it will also have a significant impact on the currency front.

With the program, overseas investors can invest directly in the mainland’s A shares without having to go through the Qualified Foreign Institutional Investor program or renminbi QFII program.

In anticipation of increased demand for the yuan in Hong Kong, the People’s Bank of China removed the 20,000 yuan ($3,256) daily conversion limit for Hong Kong residents and lifted the ceiling on offshore renminbi borrowing.

Economists agree that demand for offshore renminbi will rise markedly with the large investment flows into A shares. But whether that will mean a huge shortage of offshore yuan is unclear.

“It is still too early to predict the direction of capital flows at this stage,” said Ngan Kim Man, head of research and renminbi business development at Hong Kong-based Hang Seng Bank.

The much larger flow of investment funds from Hong Kong into Shanghai on Monday was not necessarily an indication of a longer-term trend, stock analysts said.

“The flow of capital will change direction as fast as market sentiment changes. But one thing for sure is, renminbi transaction volumes and volatility will become increasingly intense in the Hong Kong market,” said Ngan.

Stock Connect allows up to 13 billion yuan of net daily purchases from Hong Kong of Shanghai-listed stocks and 10.5 billion yuan of net purchases from Shanghai of Hong Kong-listed stocks.

It also puts a cap of 300 billion yuan in northbound (from Hong Kong to Shanghai) purchases and 250 billion yuan in southbound.

Hong Kong has the world’s largest pool of the Chinese currency outside the mainland at about 1.1 trillion yuan.

Daily spot transactions in the city’s offshore renminbi market are equivalent to about $5 billion. Even using the most conservative estimates, Stock Connect could drive the figure up by at least 20 percent, Ngan said.