Yuan takes a big step forward in 2011

Cheung Kong to launch HK's first yuan IPO

It is believed Cheung Kong may include its 33.4 per cent-owned Oriental Plaza in Beijing in the yuan reit. The 800,000 square metre development comprises eight grade-A offices, two luxury serviced apartment buildings, the five-star Grand Hyatt Beijing and a shopping mall.

Phillip Capital Management fund manager Li Kwok-suen said Cheung Kong's yuan reit should be well received.

"In view of the excess liquidity, investors are hungry for investment products that can hedge against inflation. Reits or bonds would be a good bet as they provide a regular income to investors."

But Wong said yuan products, including stocks, faced challenges because of the limited access to the currency. Currency exchanges in Hong Kong are limited to a maximum 20,000 yuan a day.

The yuan deposit base in the city increased to about 217 billion yuan as of October but still only accounts for about 3 per cent of all its deposits.

Tony Tong, market strategist at China Everbright (SEHK: 0165) Research, said it was too early to assess the market response to the IPO.

"Most Hong Kong investors tend to chase short-term gains instead of stable dividend income," he said.

It's good news for the internationalization of the yuan, but does it say anything that the first overseas yuan IPO is a property REIT?