The world’s largest IPO sees a lackluster debut in Shanghai
July 15, 2010

worlds biggest public offeringsThe last of China’s ‘Big four’ banks – the Agricultural Bank of China, touted to be the world’s largest initial public offering witnessed a lackluster listing on the Shanghai stock exchange today. The Agricultural bank is scheduled to be listed on the Hong Kong Stock exchange tomorrow. The much publicised dual listing is expected however to raise a record US$22.1 billion, beating Industrial and Commercial Bank of China’s US$21.9 billion offering in 2006 to become the world’s seventh largest lender by market vale.

A political priority, backed by many state-owned interests, shares of the Agricultural bank rose only as much as 2.2 percent from their issue price in the bank’s trading debut in Shanghai on Thursday, well below the 10 per cent jump the bank’s management had targeted. Although disappointing in the context of the Chinese market, where share prices usually soar on their first day of trading, the fact that the shares did not fall is expected to come as a relief to bank and government officials.

Analysts expect the stock to end its first day relatively flat, admit the performance was weaker than expected. Even though experts expected a major jump during the debut, shares ended the morning session at 2.70 yuan — up just 0.80 percent from the IPO price of 2.68 yuan, but lower than the opening price of 2.74.

China is on track to be the world’s biggest IPO market this year with up to 300 companies expected to raise 500 billion yuan (close to US$74 billion) this year, according to PricewaterhouseCoopers. However fluctuations in the stock market and difficulty in raising funds are keeping many large Chinese firms from going public now. Chinese automaker BYD Co. whose US$420 million mainland listing is backed by Warren Buffett announced on Wednesday that it would delay listing due to concerns about stock market weakness. Chinese wind-turbine maker Xinjiang Goldwind Science & Technology has also put its US$1.2 billion IPO in Hong Kong on hold.

“China’s equities markets haven’t been performing well recently and we would like to have more leeway to pick a better timing to list our shares,” a BYD company spokesperson was quoted as telling the AFP.  Shanghai’s Composite Index tumbled 25 percent from the beginning of this year as Europe’s financial markets melted.


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