Following massive demand from investors, shares jumped as high as 18% above their offer price in Hong Kong as trading opened on Friday.
State-owned ICBC is China’s largest bank with assets of more than $800 billion, 360,000 staff and more than 18,000 branches across China.
For the first time ever in a Chinese IPO, shares in the bank made a simultaneous debut on the Hong Kong and Shanghai stock markets.
In both cases the ICBC offering ranked as the most popular ever among investors, attracting $400 of share orders for the Hong Kong portion of the offering and $99 billion for the Shanghai offering.
The huge demand for ICBC shares is being seen as a sign of confidence in the continued rapid growth of the Chinese economy.
“Investors foresee China’s economy maintaining 10 per cent growth every year before the 2008 Olympics in Beijing, so they’re buying mainland bank shares now to access that growth,” K. C . Chan of financial management firm KDB International told Reuters.
The IPO easily tops the previous record for the world’s largest share sale – the 1998 offering of stocks in Japanese telecoms giant NTT Docomo which raised $18.4 billion.
The ICBC offer values the bank at $129 billion, ranking it seventh among global banks and putting it well ahead of such big international names as America’s Wells Fargo and Switzerland’s UBS.
Investors are banking on
The sale is the latest stage of a massive restructuring of China’s creaky state-owned banks to free them from decades of bad loans and turn them into truly commercial institutions.
At the end of 2006 China’s domestic banking market is due to open up to foreign competition under Beijing’s World Trade Organisation obligations.
ICBC is the third of China’s so-called ‘big four’ banks to list shares.
Between them ICBC, Bank of China, China Construction Bank and the yet-to-be listed Agricultural Bank of China account for almost 70 per cent of the domestic Chinese banking market.
Another smaller bank, China CITIC, is hoping to raise up to $2 billion in a share offering in Hong Kong in early 2007.