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YuanHONG KONG: Hong Kong tycoon Li Ka-shing's Yuan-denominated IPO, the world's first outside mainland China, made a limp trading debut Friday but officials said the market remained full of promise.

Shares in Hui Xian Real Estate Investment Trust tumbled to 4.88 Yuan (75 US cents), well below their 5.24 Yuan initial public offering price, despite high hopes that the issue will mark a milestone for Beijing's bid to turn the Yuan into a global currency that could rival the US dollar's dominance.

Hui Xian, a real estate investment trust (REIT) controlled by Asia's richest man, will be closely watched by the market to gauge the future of Yuan IPOs in Hong Kong.

The debut came with markets across Asia depressed by lacklustre US economic data, and Hui Xian chairman Kam Hing-lam insisted that he was "very happy" with the IPO's performance.

"This is the first renminbi-denominated REIT in Hong Kong. This is the first time the renminbi has traded on a stock exchange outside of China," Kam told a news conference, using the Chinese currency's official name.

Eddy Fong, chairman of Hong Kong's Securities and Futures Commission, described the listing as "historic".

"This strengthens Hong Kong's position as an offshore Yuan trading hub," Fong told reporters at a listing ceremony ahead of the start of trading.

The IPO has failed to spark huge interest among investors, after it was priced at the lowest end of a range of 5.24-5.58 Yuan per share, raising 10.48 billion Yuan in total.

China has been using Hong Kong -- a semi-autonomous Chinese territory -- as a test bed to internationalise the Yuan, and analysts agreed that it was too early to write off the new IPO market.

Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong, said the appetite for Yuan listings should be judged over a longer period.

"The markets sentiment in Asia today is not very strong, there are some consolidations so the Hong Kong market is just one of them," he told AFP.

Hong Kong's Hang Seng Index was 0.33 percent lower at 23,727.53 in late morning trade.

The REIT is tied to the Oriental Plaza, a sprawling 100,000 square metre (1.1 million square foot) complex in Beijing's prime Wangfujing Street which includes a mall that commands some of the city's highest rental rates.

The IPO, which opened for sale on April 11, saw the trust sell two billion units, or 40 percent of the property firm.

The institutional tranche of the offering was fully subscribed, according to a source, while a 20 percent share of the offering set aside for retail investors was oversubscribed two and a half times.

Analysts said the IPO may have failed to generate the kind of excitement garnered by previous Hong Kong share offerings because the offering's low liquidity would be unattractive to many local investors looking to buy the shares and sell them for a quick return.

China is also reportedly in talks with Hong Kong rival Singapore to set the city-state up as another trading hub for the Chinese currency. Singapore is Asia's second-largest foreign exchange trading centre after Japan.

Hui Xian's debut comes after Li raised $5.5 billion from a Singapore listing of Hutchison Port Holdings Trust, which controls deepwater ports in China and Hong Kong.

In remarks published Tuesday, Singapore elder statesman Lee Kuan Yew said he believed his country could become a secondary Yuan trading centre after Hong Kong as the Chinese currency gains broader global usage.

"Hong Kong is part of China. Hong Kong is well connected with the international financial markets. So China will use Hong Kong; the overflow may come to us," he told Dow Jones Newswires.

Copyright AFP (Agence France-Presse), 2011

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