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SHANGHAI: Agricultural Bank of China made its stock market debut in Shanghai Thursday, with its shares slightly higher in early trade in what is shaping up to be the world's largest initial public offering.
The last of China's "Big Four" state banks to go public is on track to raise a record 22.1 billion dollars in a dual listing in Shanghai and Hong Kong that has put a spotlight on investor confidence in the world's number three economy.
In early trade, shares were trading at 2.72 yuan -- up 1.5 per cent from the IPO price of 2.68 yuan, but marginally off the opening at 2.74.
AgBank chairman Xiang Junbo called the IPO an "important step" towards the bank becoming a "global, first-class commercial" institution, before striking a gong for the start of trade with Shanghai Communist party chief Yu Zhensheng.
"We are relatively satisfied with today's stock prices, which reflect investors' positive views on AgBank's current status and outlook," the bank's president Zhang Yun told reporters after trading began.
Its opening days could signal whether the bank will maximise the number of additional shares it can offer to make IPO history, beating Industrial and Commercial Bank of China's 21.9-billion-dollar offering in 2006.
China is on track to be the world's biggest IPO market this year with up to 300 companies expected to raise 500 billion yuan (close to 74 billion dollars) this year, according to PricewaterhouseCoopers.
The total number of AgBank's IPO shares is not yet known and will be determined by its market performance.
A strong start will mean AgBank will fully exercise its over-allotment options by selling an additional portion of up to 15 per cent of the number of shares initially issued for the IPO -- making it the world's largest.
Mainland analysts had forecast that AgBank shares would soar on listing day, with Soochow Securities putting the expected rise at five to 15 per cent.
AgBank was founded two years after Mao Zedong's 1949 communist revolution, with a mission to lend money to China's poor farmers and distribute state money in rural areas.
But heavy exposure to China's poverty-stricken interior meant that mission was frustrated by decades of chaotic policies, leaving it awash with bad debt.
Despite Beijing's efforts to salvage AgBank by wiping more than 345.8 billion yuan from its books, it remains the weakest of China's big banks and it remains to be seen whether it can shift from policy bank to profit-oriented company.
AgBank's stock market debut came after Fitch credit ratings agency warned of growing risks in China's banking system.
The agency warned in a report that complex deals were obscuring hundreds of billions in loans and possibly concealing a new batch of bad property and infrastructure lending.
AgBank's Hong Kong sale nevertheless drew almost a dozen heavyweight investors, including Qatar's sovereign investment fund, British bank Standard Chartered and Hong Kong's richest tycoon, Li Ka-shing.
A total of 40 per cent of the mainland shares went to 27 cornerstone investors -- mostly state-owned entities ranging from Cofco Ltd., China's main grain producer, to Aviation Industry Corp. of China to the operators of the Three Gorges Dam.
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