Thousands of people across Hong Kong were queuing up yesterday to get in on the Bank of China's (中國銀行) eagerly awaited initial public offering (IPO), jumping on the stock offer bandwagon for Chinese firms.
By early morning, hundreds of people, many of them elderly, were queuing outside three banks in the industrial Kwun Tong area in Kowloon District, with lines going back 300m as more arrived, a witness said.
Hundreds more had begun waiting before dawn outside one bank in the busy shopping area of Mongkok, local press reported, while at least a thousand were seen at another branch in surburban Shatin.
Bank staff were handing out forms and prospectuses for the IPO in which China's second largest bank hopes to raise up to US$11 billion, the largest ever cash-raising exercise in Hong Kong and one of the world's largest.
DBS Vickers sales director Peter Lai said robust demand for the stock reflects local confidence in mainland firms while a lot of short-term investors see it as an easy money-making opportunity.
"All the [recent] IPOs have generated a profit of at least 30-40 percent on the first day of trading, so that attracts a lot of punters. They believe they won't lose money," Lai said.
"There has been a new IPO frenzy here but once one or two IPOs lose money, this frenzy should stop," he added.
Tianjin Port Development, operator of China's fifth largest port, has attracted bids for nearly 1,700 times the shares on offer in its IPO to raise some US$139 million, according to market sources yesterday.
A lady surnamed Chow, a mainland Chinese who has lived in Hong Kong for over 10 years, said she missed the deadline to apply for the Tianjin Port IPO and hopes to get her chance with the Bank of China.
"I have confidence in the bank. It's a big bank in our country. I hope to keep it as our long-term investment," she said.
Market sources said yesterday the institutional portion of the Bank of China offering was already more than five times subscribed as of yesterday.
The sources said demand for the institutional portion totalled 145 billion shares against the 24.29 billion being offered, meaning there is a good chance the over-allotment option for the share sale will be exercised.
The Bank of China, whose Hong Kong unit is already listed here, is offering 25.57 billion H shares in total at a price of HK$2.50-HK$3.00 (US$0.32-US$0.38) to raise around US$9.8 billion.