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Agricultural Bank stable in trading debut

Investors concern that less-than-expected new shares have helped to depress Chinese markets

An investor looks at stock quotes at a securities trading firm in Shanghai, China yesterday. China's stocks dropped, led by commodity producers, after...

An investor looks at stock quotes at a securities trading firm in Shanghai, China yesterday. China's stocks dropped, led by commodity producers, after...

State-owned Agricultural Bank of China Ltd. held steady in its trading debut yesterday after raising up to US$22.1 billion in a mammoth initial public offering despite the global crisis and concern about its profitability.
The IPO went ahead in the face of uncertain global conditions after regulators told China's banks to raise new capital following a lending boom last year in support of Beijing's stimulus. Other banks also plan share sales to raise billions of U.S. dollars.
Agricultural Bank failed to enjoy the double-digit first day bounce that some new Chinese listings get and was down 1.1 percent at midday on the Shanghai Stock Exchange - a minimal change by the volatile standards of China's markets, where prices routinely swing by up to 10 percent a day.
The Shanghai market is off-limits to most foreign investors. Trading starts Friday in Hong Kong, a Chinese territory where the stock market is open to foreign buyers.
"The market is not specifically excited about Agricultural Bank," said Zhang Jixiu, a banking industry analyst for Hongyuan Securities in Beijing. "The stock price is very stable."
ABC sold 25.4 billion shares in Hong Kong and 22.2 billion shares in Shanghai, raising US$19.2 billion. Underwriters hold additional shares, which would raise the total to US$22.1 billion if an overallotment option is exercised.
The global IPO record of US$21.9 billion was set in October 2006 by another Chinese state-owned lender, Industrial & Commercial Bank of China Ltd.
Investor concern that there is not enough demand for the flood of new banking shares has helped to depress Chinese markets. The market benchmark, the Shanghai Composite Index, is down about 25 percent from the start of the year.
China's banks are viewed as the world's strongest after they avoided the credit turmoil that battered Western institutions.
Agricultural Bank is the last of China's "big four" state-owned commercial lenders to have an IPO. It is viewed as weaker and less profitable than ICBC and its other urban-based counterparts. It operates a costly network of farflung rural branches and its nonperforming loan ratio is higher than other major banks at about 3 percent.
In its offering, the bank emphasized its links with major state companies and growing income from insurance, investment banking and other services. It reported assets totaling US$8.5 trillion by the end of 2009.


Updated : 2021-05-12 14:17 GMT+08:00