Business and Finance

Bank of China gets $9.7 billion from the market

From the Financial Times:

Bank of China raises $9.7bn on strong demand

Bank of China on Wednesday raised US$9.7bn after it priced its heavily-subscribed initial public offering near the top end of an indicative price range.

People close to the listing said the bank, one of China’s “big four” lenders, sold its shares at HK$2.95 each, just 5 cents below the top of the range and representing 2.18 times the company’s 2006 book value.

Despite the fact that everyone knows China's state-owned banks are wobbly and burdened with numerous non-performing loans, it seems that investors have confidence in the Bank of China.

With good reason: the Chinese government would probably give a certain island away sooner than let the Bank of China collapse. A possibility that seems more remote now that their coffers have swelled by an amount of money greater than the GDP of a small country.

There are currently 1 Comments for Bank of China gets $9.7 billion from the market.

Comments on Bank of China gets $9.7 billion from the market

Imagine that a very large and well-known U.S. or European bank held an initial public offering. And let's say that this IPO was well publicized, although, in its share sale documents, the bank made these disclosures:

-- Two months ago, five of this bank's executives were arrested on suspicion of defrauding some $20 million in funds.

-- A vice-president of this bank was convicted and jailed last year for embezzling $1.75 million.

-- Bank employees were accused last year in 75 cases of financial crimes involving $151 million.

Wait, there's more:

As reported by the International Monetary Fund, this bank "pays no attention to credit risk when setting loan rates".

This bank received tens of billions of dollars in public funds from the government to cover delinquent loans -- and will need tens of billions more of these funds to stay afloat.

Question: With the above in mind, would you invest in this IPO from a U.S. or European bank?

If "NO" is your one-word reply to that question, what about this one: With the above in mind, would you invest in this IPO from a Chinese bank?

Now, perhaps you think that location (U.S., Europe or China) is irrelevant to the question -- "bank", "corruption", and "IPO" in the same sentence is all you need to know to say "NO."

And I understand, of course -- but I'm here to tell you that lots of investors think otherwise. All the bullet points above apply to the Bank of China and its IPO, which has raised some $10 billion, making it the largest such offering in six years. Demand for shares of this IPO among retail investors exceeds the supply by a multiple of 80; the bank has had to print an extra one million IPO subscription forms (New York Times, Guardian UK).

In 1999, you could produce instant, mass herding psychosis among stock investors simply by uttering the word "Internet." With the above in mind, it's no stretch to say that "China" is now making recent history repeat itself.

-- courtsey of Elliott Wave International - applied Socionomics in action...

Post a comment

All comments are moderated and subject to review by Danwei contributors and editors, but well-grounded and articulate comments will be published regardless of which way they lean. Because comments published on any website ultimately contribute to the character of that website, we may decline to publish comments that are irrelevant, redundant, or that do not adhere to generally accepted standards of courtesy; if you are looking for a fight, there are plenty of other venues available online.


Some useful html: <b>bold</b>, <i>italic</i>,
<a href="http://www.danwei.org">link</a>

Media Partners
Visit these sites for the latest China news
090609guardian2.png 090609CNN3.png
China Media Timeline
Major media events over the last three decades
Danwei Model Workers
laomo2008fpA.jpg
Recommended blogs and new media
Books on China
AXL091030storiesforthcoming.jpg
Princess Der Ling: Two Years in the Forbidden City: Two years in the Forbidden City is largely a reminiscence of the minutiae of life for one of history's most powerful women, by one of her court attendants, a Manchu noble's daughter by the name of Der Ling.
Carl Crow's The Long Road Back to China: In 1939 Carl Crow - an American journalist, advertising executive and author who had lived in Shanghai for 25 years until forced out by the Japanese - travelled up the Burma Road from Rangoon to Chongqing on assignment for Liberty magazine - 'the most interesting assignment I have ever been given'.
Front Page of the Day
A different newspaper every weekday
From the Vault
Classic Danwei posts
+ The 'national' in National Day (2006.10): Xiao Feng writes about China's national flavor, national curse, national bird, national car, and so forth, Dongfang Yu writes on the true meaning of China's National Day in the age of angry youth.
+ Don't ask so laowai don't have to tell (2008.07): An essay was written by Geremie Barmé, scholar, filmmaker and author of the new book The Forbidden City.
+ Religion and government in an uneasy mix (2008.03): Phoenix Weekly (凤凰周刊) article from October, 2007, on government influence on religious practice in Tibet.
Danwei Archives
Danwei Feeds
Via Feedsky rsschiclet2.png (on the mainland)
or Feedburner rsschiclet.gif (blocked in China)
rsschiclet2.png rsschiclet.gif Main feed: Main posts (FB has top links)
rsschiclet2.png rsschiclet.gif Top Links: Links from the top bar
rsschiclet2.png rsschiclet.gif Danwei Jobs: Want ads
rsschiclet2.png rsschiclet.gif Danwei Digest: Updated daily, 19:30