Industrial and Commercial Bank of China (ICBC) lists in Hong
Kong and in Shanghai after a world record share offer attracted massive
demand and set up the stock for sharp early gains.
People line up outside
a bank to get application forms and prospectus of the Industrial &
Commercial Bank of China (ICBC) during its initial public offering (IPO)
in Hong Kong October 16,
2006. [Reuters] |
Analysts said the offer was snapped up by retail and institutional investors
determined to get a piece of the China growth story and that means ICBC shares
could post debut gains of 10-20 percent.
Investors have ignored ICBC's chequered history and warnings by China's top
bank watchdog that an economic slowdown could increase risk and force lenders to
step up efforts to rein in bad loans, they said.
ICBC priced its shares at HK$3.07 (39 US cents) in Hong Kong and 3.12 yuan
(39 cents) in Shanghai, both at the top end of the indicative range to raise a
world-record-breaking US$19.1 billion.
That tops the US$18.4 billion float by Japanese mobile phone operator
NTT DoCoMo in 1998 and the proceeds could rise to nearly US$22 billion if an
over-allotment option is exercised in full.
"There is a huge appetite for Chinese banks because investors see it as a
proxy for buying into Chinese financial companies," said Howard Gorges, vice
chairman of South China Securities in Hong Kong.
The offer drew several billion-dollar commitments, among them from some of
the largest investment banks, the Kuwait and Qatar governments, Singapore's
Temasek Holdings and Hong Kong tycoons such as Asia's richest man Li Ka-shing.
ICBC is the third of China's big four banks to list offshore after China
Construction Bank, which came to Hong Kong last year, and Bank of China, which
listed here in June and in Shanghai in July, raising nearly US$14 billion in the
process.
All those listings brought sharp early gains and investors are clearly hoping
for a repeat performance -- Bank of China recorded a 15 percent rise on its
first day while China Merchants Bank jumped 30 percent.
Additionally, ICBC's offer price is cheaper than the others, giving more room
for a rise, according to analysts, who expect quick selling from retail
investors seeking to lock in quick profits.
ICBC's valuation is some 15 percent lower than China Construction Bank and
four percent cheaper than Bank of China on their listing.
On ICBC's long-term prospects, analysts said many investors simply believe
the bank, with 800 billion dollars in assets, is too big to fail and will always
be bailed out by Beijing if there is a real problem.
With more than 18,000 branches, 2.5 million corporate customers and 150
million individual clients, ICBC accounts for 15.4 percent of all loans extended
in China -- a profile which makes a compelling case.
At the same time, others hope China's banking reforms will be able to clean
up the hundreds of billions of dollars of bad debt accumulated in the days when
commercial gain took a back seat to communist ideology and central
planning.
