China's biggest stock listing in years barely gains on debut

Shares of Postal Savings Bank of China Co. rose only as much as 2.7 per cent in Shanghai on Dec 10, 2019. PHOTO: REUTERS

BEIJING (BLOOMBERG) - China's largest stock debut in years did next to nothing, following signs of weakening sentiment in the world's second largest equity market.

State-owned lender Postal Savings Bank of China rose only as much as 2.7 per cent yesterday (tues) on its first day in Shanghai. The bank sold its shares at 5.5 yuan apiece, allowing it to raise as much as 32.7 billion yuan (S$6.3 billion) if it fully exercises a greenshoe option. That would make it the largest onshore listing since Agricultural Bank of China in 2010. The stock closed 2 per cent higher at 5.61 yuan.

For years, mainland stock debuts were a slam-dunk trade after the regulator in 2014 imposed a valuation cap on IPOs, which saw new listings pop 44 per cent on their first trading day. That ended with this year's launch of the Star board in Shanghai, which has less stringent listing rules. The recent lack of investor confidence last week caused one of those debuts to close below its IPO price, the first time that happened in seven years.

Interest in Postal Bank's shares had been relatively tepid: its stock sale drew the least retail demand since 2015, forcing underwriters to take up more than 650 million yuan in unsold shares. China Post Group, the parent of Postal Bank, said on Sunday it plans to spend at least 2.5 billion yuan to buy the lender's A shares after its onshore debut.

The Beijing-based lender - the largest in the world by branch network - was already listed in Hong Kong. Its H shares were flat on Tuesday.

The run of faltering listings comes at an awkward time for China, which is beefing up efforts to mitigate funding challenges faced by local firms by widening access to equity financing. Beijing has made it a priority to ensure the country's capital markets play a bigger role in bolstering economic growth, which has slowed to its weakest rate in almost three decades amid a trade war with the US.

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