Investors responded coolly Friday to the first yuan-denominated initial public offering outside of mainland China that is seen as a major step in Beijing's efforts to broaden the use of its currency.

Units in Hui Xian Real Estate Investment Trust were trading in Hong Kong at 4.75 yuan, down 9.4 percent from the offer price of 5.24 yuan, which was at the bottom end of the proposed issue price range. They fell as low as 4.66 yuan at one point, with analysts blaming the poor performance on the relatively low returns the trust is offering.

The initial public offering raised 10.5 billion yuan ($1.6 billion). The international portion of the IPO was "moderately oversubscribed" while Hong Kong investors applied for 2.2 times more units than were available to them, according to a company announcement.

The IPO is being keenly watched by other companies looking to launch their own yuan-denominated financial products to tap surging investor demand for China's currency, which has strengthened about 5 percent against the dollar over the past year.

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. The currency is also known as the renminbi.

Beijing began allowing foreign companies to issue yuan debt last year. The World Bank, the Asian Development Bank, Caterpillar Inc. and McDonald's Corp. have sold yuan-denominated bonds to finance activities in China. Yuan stocks are seen as the next logical step as China expands the so-called offshore yuan market.

With the IPO, "we can help China's overall strategic development in internationalization of the renminbi," said Charles Li, chief executive of Hong Kong Exchanges and Clearing, which operates the city's stock exchange.

Offshore yuan products will "provide a new and important way for Chinese to invest gradually outside China," he added.

The amount of renminbi in Hong Kong's banking system surged to 408 billion yuan by the end of February, nearly four times more than in July 2010.

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.

Units in real estate investment trusts, or REITs, are traded like shares and offer investors property income, similar to stock dividends.

Analysts blamed the lukewarm response to the IPO on the Hui Xian's relatively low yield of 4.26 percent.

"You can buy a lot of REITs in Hong Kong that yield much more than that," said Jackson Wong, a vice president at Tanrich Securities.

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.

Hong Kong's stock exchange topped the list last year for initial public offerings, with companies raising $57 billion in share sales, outpacing its rivals in London and New York.