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ICBC shares skyrocket after initial public offering

Shares for Industrial & Commercial Bank of China (中國工商銀行) rose yesterday as China's largest lender launched its US$21.9 billion initial public offering -- the world's biggest ever -- in Hong Kong and Shanghai.

The stock's price rocketed up 14.6 percent to HK$3.52 (US$0.45) -- compared to its IPO price of HK$3.07 per share -- when it started trading in Hong Kong. They traded between HK$3.50 and HK$3.63 in the morning session.

The state-owned bank made history by simultaneously listing its IPO in Shanghai, but its shares there didn't rise as much as expected. The bank's so-called "A shares" gained 5.1 percent from their debut price to close at 3.28 yuan (US$0.42). They had been expected to trade between 3.40 yuan and 3.60 yuan.

ICBC's stock sale beats the previous record, a US$18.4 billion IPO by Japanese mobile phone firm NTT DoCoMo Inc in 1998.

In the past year, three of China's Big Four banks have successfully gone public, selling US$42 billion worth of stock to international investors.

The IPO's timing for the gargantuan bank, whose assets totaled 6.45 trillion yuan (US$816 billion) at the end of last year, couldn't be better.

After years of languishing in post dot-com bust and scandal-related doldrums, Shanghai's market has finally taken off, trading near five-year highs. Yuan-denominated A shares are up nearly 56 percent since the beginning of the year.

And Hong Kong's benchmark Hang Seng Index surged 1.1 percent to a record high of 18,353.74 on Thursday.

Over the past decade, China's best companies, such as Petro-China Co (中國石油), Sinopec Corp (中國石油化) and China Mobile Ltd (中國移動通信) have chosen to list shares in Hong Kong and other markets, given the lackluster outlook for the domestic exchanges.

Current regulations prevent most mainland Chinese from openly investing in Hong Kong shares, and bar most foreign investors from buying yuan-denominated mainland Chinese shares.

But in the past year, regulators have carried out carefully orchestrated shareholding reforms aimed at shifting government-held, nontradable shares into the market. Most of the shares affected are subject to lockup periods, helping to alleviate uncertainties over a possible flood of new shares hitting the market.

The giant bank's trading debut marks a milestone in more than two decades of reforms.
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