Hong Kong investors, flush with IPO fever, queued outside bank branches on Monday to subscribe for shares in the listing by China Life Insurance Co Ltd, which could be the world's largest this year at up to US$3 billion.

"This is the first China stock I've considered buying," said Linda Mak, who was collecting a subscription form at an HSBC branch on eastern Hong Kong island, where about 20 hopeful investors congregated before the doors opened.

China Life is printing 2.2 million application forms for retail buyers and another 400,000 for brokerages, or enough for one in three residents of the southern Chinese territory.

"There is lots of media coverage, and I think the life insurance industry is still in its infancy in China and there is lots of growth potential," said Mak, lugging a prospectus that exceeds 1,000 pages to include both English and Chinese.

IPO mania has gripped Hong Kong since PICC Property and Casualty Co, China's biggest property underwriter, generated a 50 percent return on its November 6 debut and a long rally in the broader market began to lose steam. Shares in PICC remained 54 percent above their IPO price at Friday's close.

A rally in Hong Kong stocks and mainland-related counters in particular is fueling the frenzy.

The index of Chinese shares in Hong Kong has more than doubled this year on rising profits and China's booming economy. By comparison, Hong Kong's benchmark Hang Seng Index was up 32 percent in the year through Friday.

State-controlled China Life is selling 6.47 billion shares, or a quarter of its enlarged share capital. Its IPO shares will be priced at HK$2.98-$3.65 each, or 1.44-1.64 times its estimated book value for 2003.

It will begin trading in New York on December 17 and in Hong Kong the following day.

CROWDED PIPELINE

Another upcoming debutant, Chinese truck and sport utility vehicle maker Great Wall Automobile Holding Co (2333.HK), generated such strong investor interest that it was forced last week to increase the number of share application forms available by four-fold to one million.

Great Wall, which will list in Hong Kong on December 15, aims to raise up to US$196 million. Many investors said they planned to sell the stock on the first trading day to lock in profits.

Punters are also talking about an expected listing by Chinese gold miner Fujian Zijin Mining Industry that would raise up to UD$147.4 million ahead of a December 19 Hong Kong trading debut.

"People are looking for a quick return," said Ben Kwong, associate director at KGI Asia Securities.

He said China Life shares might not match the debut of PICC, which came to market first and raised a smaller US$784 million.

"I would not be surprised to see the share price going up 30 to 40 per cent on the first day, according to the market response thus far," Kwong said.

By some estimates, Hong Kong investors have effectively frozen roughly HK$50 billion (US$6.41 billion) in funds as they wait to see how many IPO shares they will be able to buy.

Some punters have grumbled that just five percent of the China Life IPO is set aside for retail investors, with the rest earmarked for institutions. Usually 10 per cent of Hong Kong IPO shares go to retail buyers.

And the "clawback" mechanism used in the event that the deal is subscribed by 100 times or more will increase the retail portion of the listing to 20 per cent, as opposed to the 50 percent that is typical in Hong Kong IPOs.

The Hong Kong exchange granted China Life a waiver to allow its smaller clawback.

"Given the size of the offering, the portion of the IPO is not small," said Lawrence Fok, deputy chief operating officer of bourse operator Hong Kong Exchanges and Clearing.

China Life, the mainland's dominant life insurer with a 45 per cent market share last year, has already enlisted the support of three Hong Kong tycoons, including Asia's richest businessman Li Ka-shing, to subscribe for a combined US$500 million in shares.

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