The third-largest sale of new stock to the public this year is a Chinese bank that has more than double the proportion of bad loans its peers do and was investigated for money-laundering at a predecessor last year.
Investors lined up to buy.
The US$2.8-billion initial public offering of the state-run Bank of China's (
The lure: a bank whose parent has 100 million depositors and 13,000 branches in a home market. China, with 1.3 billion people and an economic growth rate of 8 percent, is opening its markets after joining the WTO. Investors say those reasons are as important -- or more important -- than the bank.
"Imagine you were overnight given access to the world's largest market, filled with people who get richer daily," said Henry Lee, managing director of Hendale Asia Fund Ltd, an alternative investment fund. "People are buying into China."
The sale's arrangers promoted the first-time share sale with meetings in such cities as Hong Kong, New York, Boston, London, Milan and Frankfurt. In Japan, the sale also was pitched with full-page newspaper advertisements.
The global portion of the deal drew at least five times more orders in Asia than in Europe and the US, a banker involved in the transaction said.
"It's a restructuring story and if you like those kinds of stories, then that's great," said Edward Allinson, manager of the US$50 million Dreyfus Founders International Fund in Boston. "I have enough of those. I don't need to buy into another one."
Asian companies, many of which are customers of the Hong Kong unit's parent and plan to expand in China as it opens to foreign competition, ordered billions of dollars of stock.
Standard Chartered Plc, a UK bank whose business is mostly in Asia, agreed to buy US$50 million in shares, sale documents said.
Hutchison Whampoa Ltd (
Shanghai Industrial Holdings Ltd's (上海實業控股) spokesman Derek Fung said the company plans to buy some BOC shares partly because "it's our leading principal banker," adding that the investment is expected to provide a "decent return."
Fund managers, for their part, are willing to buy only at the lower end of the range, marketed at HK$6.93 to HK$9.50. Twelve Asia-based investors, who manage more than US$14 billion and plan to buy shares, said they would pay an average of HK$7.87 a share.
BOC Hong Kong, formed in October by the merger of the Hong Kong and Macau businesses of Bank of China, had a non-performing loan ratio of about 9 percent at the end of last year. That's almost twice the 4.7 percent average for Hong Kong banks.
The economy barely grew last year; the bank's write-offs for loans increased to HK$1.2 billion (US$153 million) in 2001 from HK$322 million in 1999. Cleaning up bad loans caused the Hong Kong unit's 2001 net income to fall 47 percent. It shifted HK$11.4 billion of loans into a special purpose vehicle, BOC Cayman.
In January, Bank of China paid a fine of US$20 million to regulators in China and the US for making preferential loans, issuing fraudulent letters of credit and other infractions of US and Chinese rules.
In 2001, the bank discovered that three managers at the Kaiping sub-branch had embezzled about US$500 million over the previous eight years, according to the sale prospectus.
"There are big problems with all the Chinese banks," said Scott McGlashan, who helps manages US$150 million for Jade Absolute Fund Managers in the UK. "Investors are deceiving themselves if they believe the Hong Kong units of these banks will not be affected."
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
RSS