Anemic Stock Debut for BOC (Hong Kong)

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Last updated at: (Beijing Time) Friday, July 26, 2002

Anemic Stock Debut for BOC (Hong Kong)

Shares of the Bank of China (Hong Kong) began trading Wednesday and suffered a drop of 4.7 percent from the offering price amid concerns over recent market turmoils.

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BOC HK Sets IPO Offering Amid Extreme Market Volatility

Shares of the Bank of China (Hong Kong) began trading Wednesday and suffered a drop of 4.7 percent from the offering price amid concerns over recent market turmoil.

But the chairman of the second largest bank in Hong Kong by assets remained upbeat about the shares' future performance.

"I'm confident in the performance of our shares in the long run," said Liu Mingkang -- also chairman of the parent Bank of China (BOC) -- on the sidelines of the listing ceremony.

Liu attributed the poor trading debut to the fluctuations on Wall Street.

Shares of BOC Hong Kong fell 4.7 per cent from its offering price of HK$8.5 (US$1.09) to close at HK$8.1 (US$1.03) amid fragile market sentiment.

BOC raised about US$2.8 billion by selling a roughly 25 per cent interest in its Hong Kong flagship in the initial public offering, the world's third-largest and Asia's largest this year.

The offering was well-received by the market as the shares were 7.4 times over-subscribed by institutional investors and 25 times over-subscribed by retail investors in Hong Kong.

"I thought BOC Hong Kong's shares were very attractive, but current market conditions are really bad," said Louis Tsoi, a fund manager with Tai Fook Securities Co Ltd.

Hong Kong's stock benchmark Hang Seng Index closed down 0.87 per cent Wednesday at 9,884.78, giving up a 1.9 per cent early surge following the overnight re-bound on Wall Street.

"But in the long term I believe the stock is good given the quality of the bank," Tsoi said.

Because BOC Hong Kong is China's largest banking operation, the listing is considered an experiment as China looks to reform its financial sector. One of the aims of reform is to eventually list the four largest State-owned banks.

Through a "revolutionary" restructuring that ended with the listing, BOC Hong Kong has emerged as a much stronger bank, Liu said.

BOC Hong Kong was officially founded last October after many regrouping and merger activities.

"It is a revolution because we completely bid farewell to the old mindset, old culture and old mechanism," Liu said.

Through the restructuring, BOC Hong Kong has become an integrated banking unit and set up an internal structure and a risk management system based on international practices, Liu said.

The reform of BOC Hong Kong offers invaluable experiences for Chinese banks, especially for BOC, Liu said.

But Liu cautioned that the listing is only "a starting point" for BOC Hong Kong and there is still a long way to go for it to become a world-class bank.

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