The Industrial Bank Co Ltd, a mid-sized joint stock bank, saw
its share price end the first day of trading lower than previous
market expectations amid weakness in the overall market.
Shares opened on the Shanghai Stock Exchange at 24.80 yuan
yesterday, at the low end of most analysts' predictions of 24 to 26
yuan, after an initial public offering (IPO) price of 15.98
yuan.
The bank's shares then slid for most of the day to close at
22.18 yuan, up 39 percent over its IPO price.
But Gao Jianping, the bank's chairman, said at the share debut
ceremony yesterday that he was satisfied with the stock's price and
was optimistic about its future performance.
The bank raised 16 billion yuan by selling 1 billion shares on
the Shanghai bourse last month.
It attracted a massive 1.16 trillion yuan in subscriptions,
over-subscribed by 73 times, a record for a domestic Chinese IPO,
surpassing China Life's 810 billion yuan subscription in
December.
But the domestic market began falling soon after the bank's IPO,
hit by expectation the government will take measures to cool the
market.
"The lower price of the Industrial Bank's shares was influenced
by the recent market setback," said She Minhua, a banking analyst
from CITIC China Securities.
But a lower than expected price on the first trading day offers
potential for investment, he said.
The Industrial Bank has shown relatively good performance,
statistics show.
Partly owned by Hang Seng Bank, it had total assets of 532.2
billion yuan by the end of 2006.
It registered a net profit of 1.74 billion yuan in the first
half of 2006. Its net profit grew by an average 30 percent annually
from 2003 to 2005.
Its outstanding loans rose to 292.3 billion yuan as of June 30.
Its bad-loan ratio stood at 2.01 percent, lower than the 2.81
percent average of its peers.
The Industrial Bank is among a group of mid-sized commercial
banks which followed bigger market players like the Industrial and
Commercial Bank of China and Bank of China to list publicly,
raising funds to boost their finances and to help fend off foreign
competitors.
Proceeds raised from the IPO will be used to boost its capital
adequacy ratio above the minimum regulatory requirement of 8
percent, up from the 7.17 percent it recorded at the end of June
2006, the bank has said.
The funds will also be used to expand its network, build and
upgrade information systems and buy fixed assets.
China's main stock index continued to fall yesterday. The
Shanghai Composite Index slid 2.27 percent to close at 2,612.537
points, its lowest level since late December.
"The index may continue its weakness within a short period, as
investors are withdrawing money from large caps, which are
overvalued," said Zhang Qi, an analyst from Haitong Securities.
He added that the recent fall of the market has put pressure on
fund managers, as investors tend to withdraw money from fund
companies.
Turnover in Shanghai A shares shrank further, to only 54.1
billion yuan yesterday, down from 64.6 billion yuan on Friday.
"But other stocks (apart from large caps) will have a relatively
good performance," Zhang said.
(China Daily February 6, 2007)