Chongqing RCB declines on 1st day of HK trading
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Chongqing Rural Commercial Bank Co fell on its first day of trading in Hong Kong, after raising HK$11.5 billion ($1.48 billion) in the city's fifth-largest initial public offering this year.
The shares reversed earlier gains, declining 3.2 percent to HK$5.08 at the morning close after advancing as much as 4.6 percent from the IPO price of HK$5.25.
"Chongqing Bank's non-performing loan ratio is higher than other listed Chinese banks, and that's a concern to investors," said Louis Wong, a director at Phillip Securities HK Ltd. Its ratio of non-performing assets stood at 2.99 percent as of June 30, the highest among publicly traded peers.
The bank braved an 8 percent drop in the benchmark Hang Seng Index from a Nov 8 peak that forced companies including Huaneng Renewables Corp to cancel or delay public offerings. The Chinese government has stepped up measures over the past two months to drain liquidity and contain inflation, and said on Dec 3 the country will shift to a "prudent" monetary policy next year from a "moderately loose" stance.
Huaneng Renewables, a unit of China's biggest electricity producer, on Monday scrapped its first-time share sale because of unexpected and excessive market volatility. The company was seeking as much as $1.3 billion.
Chongqing Bank is the first Chinese lender since Agricultural Bank of China Ltd to go public in Hong Kong. It's the ninth and smallest Chinese bank to list in the city.
"Some investors could have switched their investment to Agricultural Bank of China from Chongqing Bank," said Linus Yip, chief strategist at First Shanghai Securities Ltd in Hong Kong. "Once the share price falls below the IPO price, it will take three to four days to ease the technical selling pressure."
Agricultural Bank climbed 2 percent to HK$4.09 at the lunch break in Hong Kong.
Fubon Life Insurance Co, Chow Tai Fook Nominee Ltd, Nexus Capital Investing Ltd and Value Partners Ltd are among the institutional investors that bought stock in Chongqing Bank's offering.
Chongqing Bank was established in June 2008 after the government merged rural cooperatives in the region. Based in Chongqing, China's most populous city, it had 62,000 corporate and 17.5 million retail customers, according to the prospectus.
Chongqing's economic growth has averaged 18.2 percent on a nominal basis over the past three years, compared with the national rate of 13.2 percent, according to government figures cited in the prospectus.
The bank, with 1,763 outlets in Chongqing, had 262 billion yuan ($39.3 billion) in assets as of June 30. It forecasts profit of at least 2.85 billion yuan this year, an increase of 51 percent from 2009.
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