Banking

ABC ends 1st day trading with 0.8% gain

(Agencies)
Updated: 2010-07-15 16:28

Agricultural Bank of China(ABC) rose 0.8 percent on its debut in Shanghai, the smallest first-day gain among the nine lenders that have sold shares in the city in the past four years.

China's largest bank by customers rose to 2.70 yuan (40 cents) from the IPO price of 2.68 yuan, giving it a market capitalization of $127 billion. First-day volume of 4.04 billion shares was the second-highest in China in the past decade, according to data compiled by Bloomberg.

Special Coverage: Focus on ABC's IPO Plan Related readings:  ABC shares open 2.24% higher at Shanghai bourse  ABC IPO lifts core CAR, challenges remain: Moody's  ABC sets H-share IPO price at HK$3.2  ABC to exercise greenshoe option for Shanghai shares

President Zhang Yun, who forged ahead with the IPO even as Chinese stocks suffered their biggest quarterly drop in more than two years, said he was "relatively satisfied" with the first-day gain. ABC's four biggest competitors rose at least 5.1 percent on their Shanghai debuts.

"Considering the size of the offering and the weakness of the market, this is pretty good," said Liu Yinghua, an analyst at PingAn Securities Co. "We, as well as many fund managers, didn't expect ABC to shine today."

Analysts and fund managers surveyed by Bloomberg had predicted a first-day gain of 6 percent, according to the average of eight estimates. The Shanghai Composite Index dropped 1.87 percent.

The $19.2 billion IPO makes China the home to four of the world's 10 biggest banks by market value, half a decade after the country's first major state-owned lender went public. ABC has given underwriters authority to expand the sale by as much as 15 percent to $22.1 billion, which would make it the largest IPO ever.

ABC shares were more twice as active as any other stock in Shanghai today. China State Construction Engineering Corp holds the record for first-day volume in China in the past decade, with 4.17 billion shares traded on its debut in July last year.

ABC is also raising $10.5 billion in Hong Kong. Those shares, priced at HK$3.20, start trading tomorrow.

ABC's Shanghai price represents 1.55 times end-2010 book value as estimated by the IPO underwriters. That compares with 1.79 times for ICBC, 1.74 times for China Construction Bank, and 1.48 times for Bank of China.

"The price is a fair reflection of ABC's status in China's financial industry if you take into account its growth prospects, problems and the broader macro condition we are in right now," said Li Ming, a portfolio manager at Dacheng Fund Management Co, which oversees about $15 billion in Shenzhen. "The bank may trade near that valuation level for some time."