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CITIC Bank A shares surge on debut

(Zhang Lu, Lillian Liu,Jin Jing )
Updated: 2007-04-28 08:44

The share price of China CITIC Bank, the country's seventh-largest lender by total assets, almost doubled on market debut at the Shanghai bourse on Friday, beating analysts' expectations.

The Shanghai stock market, however, fell despite the rise in China CITIC Bank shares, which jumped 96 percent from the issuing price of 5.8 yuan. The shares opened at 9.21 yuan and closed at 11.37 yuan.

The bank raised a total of $5.4 billion in its initial public offering, making it the world's biggest IPO so far this year.

"We are satisfied with the opening price of CITIC Bank, which exceeded my expectations," said Chen Xiaoxian, president of China CITIC Bank, at a press briefing.

Chen said CITIC Bank will strengthen its business focus on corporate banking, and rectify deficiencies in other areas, including retail banking.

"We will strengthen our cooperation with foreign investor, BBVA, following the stock listing, and will find opportunities for acquisition and mergers if government policy permits," he said.

China CITIC Bank has frozen a total of 1.2 trillion yuan in online subscriptions, the largest amount in China's A-share market.

The Shanghai composite index dropped 0.61 percent to close at 3759.87, led by a drop in banking stocks.

Meanwhile, CITIC Bank's Hong Kong-listed H shares rose only 14 percent to HK$6.68, plagued by overall market shares falling sharply amid worries that China may announce further economic-tightening measures during the Labor Day holiday next week

"It is a bit disappointing to see shares in CITIC Bank close at such a price, the recent results of all Hong Kong-listed mainland companies, especially mainland banks, are pretty strong," said Paul Lee, senior analyst with Hong Kong-based Taifook Securities.

"Speculation over new policies to cool down the overheated economy made investors cautious. The market might undergo a correction later," Lee said.

Nevertheless, investors are optimistic about China's economy and its banking industry, he added.

Chinese mainland banks have raised about $60 billion in stock offerings in the past two years as rapid economic growth drives demand for financial stocks.

Lenders, including the Industrial and Commercial Bank of China and Bank of China, saw their domestic shares surge last year, enticing smaller rivals to follow suit.

The country's economic growth accelerated to 11.1 percent in the first quarter, boosting the appeal of mainland equities.