Shares in Bank of China (BOC), the mainland's second-largest
lender, are expected to soar over the next three months after the
first day of trading on June 1, according to analysts.
BOC raised US$9.73 billion after pricing its IPO at HK$2.95
(37.8 US cents) per share yesterday, the world's largest IPO in six
years and the largest share sale ever launched by a mainland
company.
It surpasses its home rival China Construction Bank, which
raised US$9.2 billion in its Hong Kong IPO last October.
Analysts predicted the shares will grow by five to six percent
within three months after it begins trading on June 1, and they
might climb a further two to three percent afterwards.
"The shares (in Bank of China) are a good buy for long-term
investment," Tang Sing-hing, associated director from Tung Tai
Securities, told China Daily.
Tang believes BOC's listing reflects the increasing strength of
mainland financial institutions.
Founded in 1912, the mainland's oldest lender sold nearly 25.57
billion shares at HK$2.95 each, close to the top of its indicated
range of HK$2.5 (32 US cents) to HK$3 (38 US cents) per share,
driven by strong investor demand.
The IPO's retail portion was 75 times oversubscribed and the
institutional tranche was at least 20 times covered.
Addressing concerns about the impact of a stronger yuan, Tang
said it would not dampen BOC's performance.
He said the asset value of the mainland's biggest foreign
exchange bank will shrink somewhat as its large foreign currency
savings will be weakened against the strengthening yuan.
"All investors could foresee that. But it will not shake both
institutional and retail investors' confidence in the mainland's
top banks."
Hong Kongers have shown unprecedented enthusiasm for BOC's share
sale in the past week, with a total HK$287 billion (US$36.8
billion) in subscriptions flowing in since the order books were
opened last Thursday. This deal is the most popular in Hong Kong in
terms of money locked in.
Long queues at application-form distribution centers were seen
across Hong Kong until noon on Tuesday, the IPO deadline.
"I thought the closing day would be less crowded, so I decided
to hand in my order before lunch. Surprisingly, I still had to wait
in line," said 25-year-old Alex Cheuk, who bought 6,000 BOC
shares.
BOC management said it will seek an A-share listing in the
domestic market "as soon as possible".
Bank of Communications went public in Hong Kong last May and its
shares double within a few months.
The mainland's biggest property lender China Construction Bank's
record IPO last October was the largest in four years worldwide.
Strong demand for the IPO boosted its share price by about 50
percent.
(China Daily May 25, 2006)