The Chinese yuan, also known as the renminbi, is already convertible under the current account - the broadest measure of trade in goods and services. However, the capital account, which covers portfolio investment and borrowing, is still closely managed by Beijing because of worries about abrupt capital flows.
Developer prices offering low
Sino Harbour Property Group, faced with lukewarm investor response from its offering, said yesterday it priced the shares of its upcoming Hong Kong listing at HK$1.10 each, at the bottom of the range it had earlier proposed.
The company, which focuses on residential and commercial properties in Jiangxi province, had announced a range of HK$1.10 to HK$1.68 a share for its 300 million shares.
Under the listing plan, 30 million shares will be offered via an initial public offering and 270 million shares will be issued through international placement. Stock investors so far have subscribed to 13.486 million IPO shares.
The company intends to raise HK$330 million before expenses, according to a filing with the Hong Kong stock exchange.
The company's deputy chairman and chief executive Shi Feng said in an earlier interview that Jiangxi's housing sector had growth potential.
'The average home price in the urban areas of Jiangxi is about 3,800 yuan [HK$4,590] to 4,000 yuan per square metre, which is very low [compared with other Chinese cities],' he said. 'Therefore, there is room to grow and there is no bubble in the market.'
The developer has five projects in the province covering an aggregate saleable gross floor area of over 3.2 million square metres.
'Jiangxi's economic development has had a late start compared with first-tier cities and the coastal areas... but its growth has been rapid in the last few years,' Shi said. Per capita disposable income in Jiangxi doubled from 7,560 yuan in 2004 to 15,481 yuan last year.
'The per capital income in Jiangxi is about two-thirds that of coastal cities; however, the average home price in Jiangxi is only about 40 per cent of those cities,' he said. 'Therefore, the people in Jiangxi should have greater purchasing power.'
Shi said Jiangxi, which had been an agricultural province, was undergoing urbanisation at a rapid pace, which created stronger purchasing power, which would fuel the province's property market.
Beijing's measures to curb soaring property prices mainly targeted first-tier cities, Shi said, adding that second and third-tier cities in Jiangxi remained unaffected. However, last week Beijing said it would restrict property purchases in smaller cities as it extended its efforts to rein in the mainland's housing market.
The restrictions, which will apply to second and third-tier cities, were unveiled at a State Council meeting chaired by Premier Wen Jiabao on July 14.
In January, the central government unveiled a package of eight austerity measures to put the brakes on property prices. That included restricting registered resident owners in those cities from buying more than two flats.
Trading of the shares will start today, Sino Harbour said in the statement.