CHINA: HK shares hit new record as ICBC makes strong debut

Record ID: 848175

  • Title: CHINA: HK shares hit new record as ICBC makes strong debut
  • Date: 28th October 2006
  • Summary: (SOUNDBITE) (Mandarin) 23-YEAR-OLD MR. WANG SAYING: "I should say I have confidence, it (ICBC) is after the mother of banks, it has done much for our country's economy. But now, many foreign investors are also taking into account its management of risky investments and the confidence in its lending rates. So for them, there still exist some problems."
  • Embargoed: 12th November 2006 12:00
  • Keywords:
  • Location: China
  • City:
  • Country: China
  • Topics: Finance
  • Reuters ID: LVAC5JV03R2H1JXFP9Y09ECCOKWM
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  • Story Text: Shares in Industrial & Commercial Bank of China 1398.HK, which is raising up to US$21.9 billion in the world's largest IPO, rose as much as 18 percent in their Hong Kong debut on Friday (October 27) after its stock sale generated huge investor demand.
    The debut values the largest Chinese lender, making the first simultaneous Hong Kong and mainland China listing, at about US$141 billion, ranking it fifth among global banks, behind JPMorgan Chase & Co JPM.N and ahead of Mitsubishi UFJ 8306.T.
    "ICBC has fully enter the domestic and international capital market, This not only opens a new chapter in the building of this bank into a modern financial corporation, it's also making history by listing both A-shares & H-shares at the same time. It has also created the record of the world's largest single IPO internationally," said ICBC Chairman Jiang Jianqing.
    China began listing its banks overseas last year, and all four of ICBC's predecessors to the market have drawn huge demand for their shares as investors downplay worries about the legacy of decades of state-directed lending.
    The stock leapt as high as HK$3.63 shortly after the Hong Kong market opened -- towards the high end of forecasts -- compared with an IPO price of HK$3.07.
    The shares pared some of their early gains, ending the morning session at HK$3.55, up nearly 16 percent, while its Shanghai-listed shares were up 7.4 percent.
    Market watchers had expected the Hong Kong shares to rise as much as 20 percent in their debut.
    "On paper, if you look at the past track record, it's not a worthwhile investment target but obviously investors are looking at something different. They look at the China economy which is the fastest growing in the world now. And in twenty years time, it will be the largest economy in the world overtaking USA," said Francis Lun of Fulbright Securities.
    Traders at the Shanghai Stock Exchange shouted and cheered when the Hong Kong debut price was displayed, triggering a flurry of orders in Shanghai that briefly pushed A-shares back to the morning's high.
    ICBC raised $19.1 billion and is expected to expand the offering to $21.9 billion by exercising an over allotment option.
    The stock sale was the most popular in Hong Kong and China history, and unmet demand for shares, combined with a surging Hong Kong market and an offering priced at a discount to peers, helped lift its first-day trading performance.
    The IPO, about 75 percent of which was sold to Hong Kong and global investors and the remainder in the mainland, surpasses Japan's NTT Docomo 9437.T, which raised $18.4 billion in 1998, as the world's largest share sale.
    China has scrambled to get its creaky banks into better shape ahead of increased foreign competition set to kick in at the end of this year under its World Trade Organisation obligations.
    ICBC's IPO attracted share orders worth about US$400 billion for the Hong Kong portion of its deal and 780.7 billion yuan (US$99 billion) for its domestic deal.
    "I just start to buying stock recently and I don't know much about it. I am not expecting to make some profit, I want to keep it long term," said Hong Kong investor Sin-ming Lam.
    The shares attracted buyers young and old across China.
    "I should say I have confidence, it (ICBC) is after the mother of banks, it has done much for our country's economy. But now, many foreign investors are also taking into account its management of risky investments and the confidence in its lending rates. So for them, there still exist some problems," said Mr. Wang, a 23-year-old investor in Shanghai.
    "As a stock listing, this signifies a good moment of change for the bank. This also shows that our economy is changing and developing," said Mr. Qiu, who is in his 50s.
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