China Construction Bank (CCB) made a strong debut on Tuesday on the Shanghai Stock Exchange as its share price jumped 33.64 percent to 8.62 yuan in the morning session.
The bank opened 32.56 percent higher at 8.55 yuan per share, 2.1 yuan higher than its initial public offering (IPO) price. The stock price jumped to 9.05 yuan per share in the morning session and then remained under 9.0 yuan.
The price had made CCB overtake the Industrial and Commercial Bank of China (ICBC) to become the largest stock on the A-share market.
The market value is not so important as the core competency and compared with leading international banks, there is still distance for CCB to make up, said Guo Shuqing, chairman of the bank, at Tuesday's press conference.
More than 99 percent of CCB's revenues come from the mainland and the A-share listing will help CCB to grow faster and better, said Guo.
As the country's second largest commercial bank, the CCB raised 58.05 billion yuan (7.7 billion U.S. dollars) in its Shanghai IPO.
This made CCB's IPO the biggest domestic listing, exceeding the 46.6 billion yuan of the ICBC in October last year.
The share price is set by the current market and can not be compared with ICBC's IPO price a year ago, said Guo.
The bank, Chinese partner of the American Bank, set the price for its IPO at 6.45 per share, the high end of its price range, due to record subscriptions. The price translated into a price-to-earnings ratio of 32.91 times.
It attracted 2.26 trillion yuan in subscriptions for its yuan-denominated A-share sale, exceeding the 1.9 trillion yuan received by the Bank of Beijing, the country's largest city commercial bank a week ago.
Analysts said investors chased CCB's shares because of its good profitability and bright growth prospect.
The bank issued nine billion shares, less than 3.85 percent of the expanded capital after the IPO and the proceeds would be used to boost its capital adequacy ratio.
The bank's earnings per share in the first half of 2007 was 0.15 yuan, compared with 0.12 yuan for the ICBC and Bank of China.
Its non-performing loans ratio stood at 2.95 percent at the end of June, lower than the 3.29 percent half a year earlier.
Source: Xinhua
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