Shares of the Agricultural Bank of China (ABC), which successfully claimed the title of the world's largest initial public offering (IPO), will face a major test in the market in the coming week after it exercised the over-allotment option to help limit price volatility.

By fully exercising the 15 percent over-allotment quota, also known as the greenshoe option in Shanghai and Hong Kong, the lender's offering totaled $22.1 billion, eclipsing the record set by Industrial and Commercial Bank of China for its $21.9 billion IPO in 2006.

The greenshoe tactic allows a company to sell more shares than it originally planned within 30 days after listing. It is a tool used by underwriters to stabilize and limit volatility in a stock's price.

ABC's underwriters and the domestic institutional investors have struggled to keep its share prices above the IPO price of 2.68 yuan through the greenshoe mechanism after the lender's modest offering debut in mid July.

Analysts said it was highly probable the lender would see its shares fall below the offering price in the coming week as investor confidence remained relatively weak and there was growing selling pressure on the market.

"ABC's shares would have already dropped below the offering price if its underwriters had not stepped in to support the price through the greenshoe mechanism," said Fu Lichun, a Beijing-based banking analyst at Southwestern Securities. "Market sentiment remains weak and the price of 2.68 yuan is still a little expensive in the eyes of many investors," he said.

Although a sharp decline in ABC's shares is unlikely given its low valuation, analysts said the stock was likely to move sideways around the offering price as concerns about the government's property tightening policies and the default risk of local government debts have not been fully digested by the market.

"Such a low level of valuation means that there is not much room for further decline," Fu said. But there still lacks a strong positive factor to support a sustainable rise in banking shares as potential risks have not been fully absorbed by the market."

After tumbling by nearly 20 percent since April, shares in banks have started to advance as investors speculated that the government would ease its tightening policies and allow more lending to counter slowing growth in the second half of the year.

But the country's banking regulator's recent order for banks to transfer off-balance-sheet loans on to their books and the reduced likelihood of an interest rate hike in the coming quarters may continue to weigh on any rebound, analysts said.