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Saturday, May 7, 2011

1st yuan shares to trade outside China make debut

The first yuan-denominated shares to trade outside of mainland China made their debut in Hong Kong Friday in a landmark initial public offering as Beijing seeks to broaden the use of its currency.

Units in Hui Xian Real Estate Investment Trust fell to 5.1 yuan shortly after trading began from the offer price of 5.24 yuan, which was at the bottom end of the proposed issue price range.

The initial public offering raised 10.48 billion yuan ($1.6 billion).

Investor interest in financial products is surging because of the growing strength of the yuan, also known as the renminbi.

Hui Xian's sole asset is the Oriental Plaza, a complex in Beijing controlled by billionaire Li Ka-shing, Hong Kong's richest man. Two billion units in the trust, or 40 percent, were sold to investors.

The remaining 60 percent of the trust will be owned by six companies, including Cheung Kong (Holdings) Ltd. and Hutchison Whampoa Ltd., both controlled by Li, and Bank of China Ltd.

Oriental Plaza consists of a shopping mall, office and apartment towers and the Grand Hyatt Beijing hotel.

Investors and other companies looking to launch their own yuan stock offerings will be keenly watching the results.

Beijing is promoting Hong Kong as a platform for yuan-based international banking. Hong Kong is a former British colony that was handed back to China in 1997, but maintains its own political and financial systems and currency, the Hong Kong dollar.

Hong Kong banks started handling yuan in 2004 and now offer services including deposits, credit cards and trade financing that allows foreign companies to pay Chinese business partners in yuan.

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