Stock up 1.3%, despite capital diversion to new shares
Updated: 2007-07-12 16:16
Four new stocks started online subscriptions for their initial public offerings (IPOs) today. As the first city commercial banks making IPOs in the country, Bank of Ningbo and Bank of Nanjing announced their price ranges will spur a new round of bank listings, as most state-owned and joint-stock banks had already gone public, said analysts.
Bank of Nanjing, partly owned by top French lender BNP Paribas, plans to sell up to 700 million A shares, or 36.72 percent of its enlarged capital after the initial public offering (IPO), for a listing on the Shanghai stock market.
Bank of Ningbo, partly owned by Singapore's Oversea-Chinese Banking Corp, will issue 450 million A shares, or 18 percent of its enlarged capital, for a listing on the small- and medium-sized enterprises (SME) board of the Shenzhen stock market.
Sichuan Gaojin Food was priced at 10.15 yuan and will issue 270 million shares while Guangdong Ronsen Super Micro-Wire was priced at 8.15 yuan and is to issue 203 million shares.
At the same time, the two stock exchanges pledged to combat "malicious" speculation on news shares on their first trading days. In separate statements, the two bourses said they will monitor "suspicious" trading accounts with frequent biddings of large amounts when the tender prices are extremely higher than the real-time prices of the target stocks or shares on their first trading day. They may freeze such accounts if such activities are detected and categorized as "malicious" speculation, said the exchanges.
The measure came after the Shenzhen Topband Electronics case last month. The company, listed on the small- and medium-sized enterprise board of the Shenzhen Stock Exchange, saw its share prices rocket five folds on its first trading day last month. Then it slumped and lost the maximum cap of 10 percent for consecutive days to its initial price. Many retail investors lost substantially in the panic, selling for days.
According to the latest statistics, mutual funds have enjoyed robust growth in the second quarter. By the end of June, the total number of mutual fund units (priced at 1 yuan per unit at issuance) reached 1,239.996 billion, up 622.067 billion from the beginning of the year, including 180 billion newly subscribed units in the second half. Net asset of mutual funds was 1,799.417 billion yuan by the end of June, doubled from the beginning of 2007.
Continuous corrections in the Chinese stock markets in June slowed the pace of money flowing out of banks and into the markets, according to latest statistics from the Shanghai headquarters of the central bank.
In June, movement into the stock markets slowed for the first time in five months. Domestic financial institutions in Shanghai had received new deposits of 6.09 billion yuan (US$801 million) in June. This figure was still up 5.07 billion yuan year-on-year, according to the statistics.
Enterprise renminbi deposits in Chinese financial institutions in Shanghai increased 76.93 billion yuan during the first half of the year, 28.25 billion yuan more than the increase during the same period of last year. The increase in fixed enterprise deposits was only up 2.21 billion yuan from a year ago, while that in current enterprise and household deposits rose by 26.04 billion yuan and 2.5 billion yuan respectively.
A rise in current deposits indicates enterprises are successful and efficient in capital circulation, the Shanghai headquarters noted. Enterprises and citizens were also active in stock trading and investing in the real estate market in the first half of 2007, contributing to higher current deposit rates.
However, further monetary tightening is expected despite the recent cooling of the stock investment. China's central bank may raise the interest rate this month, and the Ministry of Finance may also cancel or cut the interest tax, according to a monthly report released yesterday by Bank of China.
The measures are intended to cool down the nation's overheated economy. According to the report, China's gross domestic product (GDP) for the first half of this year will be 11.3 percent higher than the same period a year earlier. The central bank's prediction is lower; it expects GDP to increase by 11 percent in the first half of this year and 10.8 percent over 2007.
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