STOCKS of China Construction Bank jumped by as much as 40.3 percent on their trading debut in Shanghai yesterday amid strong buying of the biggest initial public offering on the Chinese mainland.
The bank surged as high as 9.05 yuan (US$1.21) after opening at 8.55 yuan on the Shanghai Stock Exchange, up from its IPO price of 6.45 yuan apiece. The stocks closed at 8.53 yuan, up 32.25 percent.
Construction Bank, the country's second-biggest lender by assets, raised 58.05 billion yuan in a nine-billion share sale last week after selling the stocks at the upper limit of an indicative price range.
"The A-share listing has brought us tens of thousands of domestic shareholders, most of whom are also our clients," said Guo Shuqing, the bank's chairman, at a press conference.
"It will prompt us to bolster corporate governance and shore up services quality."
Mainland retail investors oversubscribed the yuan-backed offering about 40 times and institutional investors 34 times, according to the lender. Its Hong Kong-listed stocks shed 5.28 percent yesterday to HK$7.10 (91 US cents).
Bank of America, which owned a nine-percent stake in Construction Bank before the A-share issue, had its holding diluted to 8.2 percent. The US lender won't exercise a right to boost its holdings to the previous level, Guo said.
'On track'
"The bank has better potential earnings than its domestic rivals, which will make its stocks more attractive," said Gu Junlei, an Orient Securities Co analyst.
"We advise long-term investors to buy the stocks at a price of lower than 7.95 yuan and sell them at above 10.60 yuan."
Construction Bank will rein in credit growth in line with the government's macro-economic policies, Guo said. The lender is also seeking a license for its Hong Kong investment-banking unit CCB International to start business on the mainland, according to Guo.
"Our bank is on track to conduct across-the-board development," said Zhang Jianguo, president of Construction Bank. "We are also devoted to exploring the huge potential in our businesses overseas."
Zhang said that Construction Bank is preparing to take part in an upcoming government-led program to help mainland individual investors to trade Hong Kong-listed stocks.
Construction Bank is awaiting approval from the country's banking and insurance regulators to form a life insurance venture with Ping An Insurance (Group) Co, according to Guo.
Guo added that the bank is negotiating with potential partners to purchase an office building in Hong Kong to establish its regional headquarters.