Money

China markets brace for AgBank IPO pricing

(Agencies)
Updated: 2010-07-06 15:33

Agricultural Bank of China, the country's No 3 bank by assets, is set to price its dual Hong Kong and Shanghai IPO late on Tuesday, determining whether it will become world's largest ever share offer.

AgBank's pricing will also provide a barometer of sentiment for other Chinese banks planning to raise billions of dollars more from investors worried about slowing growth, rising bad loans and tanking global stock markets.

Special Coverage: Focus on ABC's IPO Plan Related readings:  ABC Shanghai IPO draws strategic investors  ABC starts to accept IPO subscriptions from institutional investors  ABC's HK offer 10 times oversubscribed by institutions  ABC IPO may raise $20b on Shanghai price

A low-range price would help the chances of a first day jump in its share price, but would also back the view that AgBank, as the weakest of China's top four banks, is coming to market at a tough time.

China's benchmark stock index has lost nearly a quarter of its value since mid-April and fell sharply last week, partly due to investors selling stocks to raise money for the AgBank offer.

Mark To, Head of Research at Wing Fung Financial Group, said he believes that money will flow back into Chinese shares once AgBank lists, particularly toward mainland banks and property developers.

"Investors have been on the sidelines waiting for the AgBank IPO but I see volume picking up once again after the listing as the fundraising has already been discounted in the stock prices and pessimism about the global economy tempers," he said.