Money

AgriBank gains 2.2% in HK debut

(Agencies)
Updated: 2010-07-16 16:49

Agricultural Bank of China Ltd rose 2.2 percent on its debut in Hong Kong, after posting the smallest first-day gain among major rivals in Shanghai yesterday following a $19.2 billion initial stock sale.

China's largest bank by customers climbed to HK$3.27 (42 cents) at the 4 pm close from the IPO price of HK$3.20. The shares fell 0.4 percent to 2.69 yuan (40 cents) in Shanghai, giving Agricultural Bank a market capitalization of $128.6 billion. Hong Kong's benchmark Hang Seng Index fell 0.03 percent.

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Unlike its four largest local rivals, who went public in Hong Kong in 2005 and 2006 in the midst of a five-year bull market, Agricultural Bank's debut came after a 7.5 percent drop in the city's benchmark stock index this year. Chairman Xiang Junbo also had to contend with investor concern that a slowdown in China's property market might saddle banks with bad loans.

"Investors are worried about local government finances, a property downturn, about the big credit expansion last year; all these will produce bad debts," Anthony Bolton, president of investment at Fidelity International, said in a Bloomberg TV interview today. "That's why valuations are where they are."

Analysts and fund managers surveyed by Bloomberg had predicted a first-day gain of 5 percent in Hong Kong, according to the average of seven estimates. The bank rose 0.8 percent in Shanghai yesterday, falling short of the average projection for a 6 percent increase.

Agricultural Bank's Xiang said today he's "very satisfied" with the share price in Hong Kong.

First-day volume in Hong Kong was 3.19 billion shares, or more than six times the number of shares traded in rival Bank of China Ltd.