Stocks News
- Industrial Bank debut highlights dented market
Date: 6-Feb-2007 Sources: (Shenzhen Daily)
SHARES in Industrial Bank began trading in Shanghai yesterday up more than 50 percent, but at the low end of expectations, underlining a dent in investor confidence after the market plunged last week.
Industrial Bank attracted US$149 billion in subscriptions last month, a record for a domestic initial public offering (IPO), but analysts said the market's recent setback had caused investors to scale back their expectations for new listings.
This new sense of realism is likely to prove healthy for Industrial Bank shares and the broad market in the longer term, some said.
'At the current share price, it's quite safe to buy Industrial Bank's shares, based on the company's underlying business outlook,'said banking analyst Wu Yonggang at Guotai Junan Securities, one of the top brokerages.
Industrial Bank, a mid-sized lender which is nearly 13 percent owned by Hong Kong's Hang Seng Bank, opened at 24.80 yuan, 55 percent above its initial public offering price of 15.98 yuan.
But the opening was at the low end of market forecasts of around 24 to 26 yuan, and the shares closed 38.8 percent higher at 22.18 yuan.
Industrial Bank's IPO last month attracted a massive 1.16 trillion yuan (US$149 billion) in subscriptions, and was 73 times subscribed, a very high level for a major financial stock.
But the stock market began tumbling soon after the IPO was concluded, hit by signs that the government saw the market as overheated and was taking steps to cool it down by restricting speculative fund flows.
'It's now a consensus that the market will consolidate for a while, and weaker sentiment hurt interest in Industrial Bank today,'said analyst Cao Xuefeng at West China Securities.
'But many investors are now using the market correction to adjust their investment portfolios, from over-priced large-caps to relatively cheap second-tier stocks. This shows most of them are still optimistic about the medium-term trend,'he said.
Analysts view Fujian-based Industrial Bank, which raised 16 billion yuan in China's fourth-largest domestic IPO, as one of the faster-growing and better-managed companies in the bank sector.
But in contrast to the jubilant mood during the listings of other big financial stocks in recent months, the atmosphere in the Shanghai Stock Exchange's trading hall was quiet and subdued as the bank's opening price appeared on the electronic boards.
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