Bank of Communications Ltd (交通銀行), China's fifth-largest lender, was expected to make a strong debut on Hong Kong's stock exchange today when it becomes the first Chinese bank to list its shares outside the mainland, analysts said.
Some are projecting early gains for the bank of more than 20 percent, based on healthy demand for the IPO, one of several planned by Chinese firms this year.
The bank, also called BoCom, is raising US$1.88 billion in the stock sale, with each share going for HK$2.50 (US$0.32). That makes it Hong Kong's second biggest offering so far this year after coal producer China Shenhua Energy (中國神華能源) raised US$2.95 billion earlier this month.
"Expectations for BoCom's debut are high, as can be seen by the level of oversubscription," said South China Holdings' director, Howard Gorges, who forecasts a "healthy premium" to the IPO price.
The deal has been one of the most popular big-ticket IPOs in Hong Kong for more than a year. The retail tranche was 204 times subscribed and the institutional tranche more than 20 times covered. Boosting investor confidence is HSBC Holdings Plc's 19.9 percent stake in the bank.
The retail response was the largest to a US$1 billion-plus IPO since the US$1.8 billion offering of Semiconductor Manufacturing International Corp (
Some analysts, however, predicted that the stock may well end the day with only a modest advance as institutions dump the stock to take quick profits and free up cash to plow into other IPOs out of China later in the year.
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