Not just about currency appreciation anymore

Most Hongkongers have experienced the yuan story in terms of their investments. Initially, this was in the form of stockpiling vast amounts of yuan on deposit at banks at a low interest rate.

But Hong Kong's yuan market has evolved quickly in three years. The big breakthrough happened in July 2010, when the People's Bank of China and the Hong Kong Monetary Authority allowed institutional investors and corporations to open yuan accounts in the city.

This reform had the effect of letting corporations raise capital in yuan - they now have the ability to hold any funds raised in a Hong Kong account - and allowing investors to hold yuan to buy and sell securities. The most obvious and immediate impact of the new regime was a surge in issuance of dim sum bonds (offshore yuan bonds) in Hong Kong.

"Previous to 2010, only retail investors could buy yuan and there was not a diverse enough pool to support broad bond issuance," said Kuldeep Singh, Citi's head of markets and country treasurer. "Post the liberalisations in 2010, we found ourselves in a situation where institutions could accumulate yuan, and you had a case-by-case ability for issuers to issue bonds in Hong Kong and to repatriate proceeds into China. So there was a supply of yuan and a usefulness to yuan. That activated the dim sum market."

Dim sum bonds jump-started the yuan investment market in Hong Kong, and banks quickly rolled out an array of instruments to the public. For example, HSBC launched yuan life insurance, yuan structured deposits and internet banking in yuan in 2010.