Bank of China IPO

[HenryTo]

With this successful IPO of Bank of China, this propels the Shanghai Stock Exchange into the international spotlight and scrutiny. Going forward, the financial authorities will be forced to more quickly clean up the financial industry and weed out corruption.
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SHANGHAI, July 5 (Reuters) - Shares in Bank of China (601988.SS: Quote, Profile, Research) (3988.HK: Quote, Profile, Research), the country's second-largest bank, surged 29.5 percent on Wednesday as they began trading in the Shanghai stock market's biggest-ever listing.

The shares opened at 3.99 yuan, compared with their domestic initial public offer price of 3.08 yuan. Analysts had predicted the shares would rise to at least 3.50 yuan, and maybe as high as 4.50, on their first day of trade.

The opening price gave Bank of China a market value of 710 billion yuan ($88.75 billion), making it Shanghai's largest stock, accounting for about 18.5 percent of the total capitalisation of all firms on the market.

The shares' price/earnings ratio rose to 31.4 times estimated 2006 earnings, more expensive than ratios of around 18 for other listed Chinese banks.

Bank of China, the country's top foreign exchange lender, is enjoying rapid expansion of its domestic and overseas business on the back of China's booming economy and foreign trade. It has forecast net profit will be no less than 32.3 billion yuan in 2006, up 25 percent.

Its shares are also benefiting from pent-up investor demand, since it is the first big stock to list on China's domestic share markets since Beijing lifted a year-long ban on public offers. ($1 = 8.00 yuan)