Shares in Bank of China rose a better-than-expected 14.4 per cent in their trading debut this morning as investors shrugged off jittery markets.
The bank raised $9.7 billion in the world's largest initial public offering in six years, and the flotation marked another milestone in Beijing's efforts to clean up a banking sector that has long been a weak link in the country's booming economy due to decades of state-directed lending.
China wants to whip its lenders into shape before opening the sector further to overseas competition at the end of the year under the country's World Trade Organization obligations.
Bank of China shares, the most active in Hong Kong, traded at 3.375 Hong Kong dollars, compared with their IPO price of 2.95 Hong Kong dollars, which was just below the top of its indicated range of 2.50-3.00 Hong Kong dollars. Hong Kong's benchmark Hang Seng Index was flat but has fallen around 8 per cent from a May 8th peak.
The stock's rise defied predictions for a muted debut as analysts had expected the nearly one million Hong Kong retail investors who bought shares in the deal, often on margin, to unload their holdings.
Market insiders said investors were attracted to the Bank of China brand name and the fact that its IPO was priced at a discount to Hong Kong-listed mainland rivals China Construction Bank and Bank of Communications.