The market response to the Hui Xian REIT has been a bit

"The market response to the Hui Xian REIT has been a bit slow and the retail portion has not been fully subscribed yet," Alvin Cheung, associate director at Prudential Brokerage, was quoted as saying on Friday.

The retail offering will close on Tuesday.

As of April 14 - four days into bookbuilding - the public offering tranche was still not fully covered, based on margin financing and estimated orders, IFR said.

Hong Kong's main brokerages reported margin financing of about 602 million yuan, accounting for only 27 percent of the retail tranche, IFR said. Hui Xian REIT has set aside 20 percent of its IPO, or 2.09-2.23 billion yuan, for retail investors.

Prudential Brokerage has only lent out HK$30 million ($3.9 million) of margin loans for the IPO so far, well below the HK$1.5-10 billion it typically lends on other Hong Kong dollar-denominated IPOs.

Subscriptions in cash were taking time to come through, although about 100,000 copies of the prospectus and 400,000 white forms had been handed out, IFR said.

"It seems retail investors prefer to buy in cash than through margin financing. The reason may be that they are afraid to get more shares in hand than expected, as the chances of that are greater than in regular IPOs," said a Hong Kong-based fund manager. "What's more, the cost in margin financing is also a consideration."

Margin financing on Hui Xian's IPO is more expensive than usual, with brokers charging annualised interest rates of about 2 percent, compared with the usual less than 1 percent to compensate for the additional cost of swapping Hong Kong dollars to yuan, IFR said.

Some brokerages were charging as much as 2.8 percent for margin financing against 1-2 percent for Hong Kong dollar issues, according to Cheung at Prudential, which charges 1.8 percent, the report said.