Another day, another Chinese bank IPO. Shares in Bank of Communications
surged 71% in its first day of trading in Shanghai, in spite of the
growing number of Cassandras warning domestic investors of a stock
market bubble.
The surge in BoCom's share price shows Chinese investors still see IPOs as a one-way bet and the bank, the fifth largest in China, attracted a record amount of subscriptions for a mainland IPO public offering.
The price rise gives HSBC a paper profit of $11.8bn on its initial 2004 investment in BoCom, although the UK-based bank is unlikely to sell its strategic stake in BoCom. Indeed, Jiang Chaoliang, chairman of BoCom, said he expected the UK-based bank to bring its investment back up to 19.9%, the maximum allowed by a single foreign bank, after seeing it drop to 18.6% as a result of the IPO.
More on HSBC's relationship with BoCom in this EngagingChina story.
Bocom has been listed in HK since June 2005, when it became first China-based commercial bank of its kind to get listed outside of the Chinese mainland.
