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China Shares Advance, As Banks Rebound
2006-09-28
SHANGHAI, China -- Chinese stocks rose Wednesday, reversing losses over the past three sessions, but the market's upside was capped by concerns a massive initial public offering by Industrial & Commercial Bank of China will strain liquidity.The benchmark Shanghai Composite Index gained 0.7 percent to 1,725.04 after falling 1.6 percent over the past three sessions, partly due to a pension fund scandal that resulted in the ouster of Shanghai's top Communist Party official, Chen Liangyu. The Shenzhen Composite Index rose 0.8 percent to 430.51. ICBC, China's largest lender by assets, said in an IPO prospectus published Wednesday that it expects to list in Shanghai and Hong Kong on Oct. 27. The bank could raise up to US$19 billion through a dual IPO in both Shanghai and Hong Kong in the world's largest stock offering ever. "Many traders expect the market to slump with ICBC's IPO, which they say will divert cash from existing stocks," said Kang Haoping, an analyst at Jutian Securities. Trading was thin Wednesday ahead of the Sept. 30-Oct. 8 National Day holidays, when financial markets will be closed. Wednesday, bank shares surged on both bargain hunting and hopes that ICBC's IPO will boost the sector as a whole. China Merchants Bank rose 3.8 percent to 9.47 yuan; China Minsheng Banking climbed 3.2 percent to 5.16 and Shanghai Pudong Development Bank added 2.5 percent to 10.40. Merchants Bank and Pudong Development Bank had dropped 5.3 percent and 6.8 percent respectively, over the past three sessions, and Minsheng lost 4 percent Tuesday. "They could gain more before ICBC's listing (next month), with Merchants Bank's case fresh in people's minds," said Wu Jianxiong, an analyst at Guotai Junan Securities. Merchants Bank's mainland-listed shares surged 25 percent in the month before its Sept. 22 Hong Kong IPO. Muzi.com News
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