Andrew Lam, BDO's assurance partner, says for yuan-denominated listings to gain investor acceptance there needs to be a critical mass of 20 or 30 quality companies on the Hong Kong stock market and a larger pool of yuan liquid assets.

'Renminbi listing is at the infancy stage - although investors are interested in renminbi products because of the anticipated appreciation of the currency. We need a pool of high-quality stocks to make the renminbi stock market more vibrant,' he says, adding that there may not be enough yuan deposits in Hong Kong to invest in a possible increase of yuan listings. According to the Hong Kong Monetary Authority, yuan held in Hong Kong deposits have passed the HK$500 billion mark. However, there are many financial products, in addition to yuan stocks, chasing after these deposits.

Lam says the fact that financial institutions, such as banks and brokers in Hong Kong, are not freely allowed to lend yuan to investors, seeking yuan products on margins and that exchange restrictions are imposed on the yuan, also raises challenges for the yuan market.

Daniel Lin, managing partner of Grant Thornton Jingdu Tianhua, says providing the framework for yuan listings is another move towards making Hong Kong the hub for an internationalised yuan currency. 'There is clearly demand for renminbi products, so there is no reason why good companies with attractive valuations should not do well if they choose to place their listing in [yuan],' he says.

Believing investors will adopt a wait-and-see approach, Edmond Chan, a partner at PricewaterhouseCoopers, says investors are looking for value whether an IPO is denominated in yuan or Hong Kong dollars. 'With just one listing in renminbi, investors are looking to see what happens with the share price,' he says. 'We will also need to see more companies structure their listings in renminbi before we can tell if renminbi-denominated equity listings will become part of the mainstream finance products.'

An additional challenge is the uncertainty about what issuers will be allowed to do with their yuan proceeds, Chan says. 'While the currency can be freely traded and invested in Hong Kong, and used for trade settlement, it cannot be easily repatriated to the mainland as it is subject to regulatory approvals.'

Jackson Wong, vice-president at Tanrich Securities, says further liberalisation of the yuan, which could see more companies list on the Hong Kong exchange using mainland currency, would be a positive move for investors.

'There is no doubt investors have a lot of enthusiasm for the renminbi, which we can expect to translate through support for good companies if they see an advantage in electing a renminbi-denominated listing. However, despite the rapid development of the currency, we still lack liquidity and investment choices,' Wong says.

Cautiously optimistic about yuan listings, Terence Ho, Ernst & Young's Greater China IPO leader, believes it is inevitable that more companies will opt for yuan listings.

'As more companies choose renminbi-denominated listings, investors' interest in investment products will pick up as they are offered a wider choice,' Ho says.

Andrew Weir, partner of KPMG, says he expects yuan listings to gain momentum. 'When we look at the growth in [yuan] products over the last 18 months, more renminbi-denominated listings would seem to be a natural progression,' he says.