Fri, July 16, 2010
Business > Markets > Agricultural Bank of China launches IPO

Agricultural Bank's debut solidifies HK status as int'l financial center

2010-07-16 13:07:21 GMT2010-07-16 21:07:21 (Beijing Time)  Xinhua English

Donald Tsang (C), Chief Executive of Hong Kong SAR, Xiang Junbo (L), chairman of Agricultural Bank of China and Ronald Arculli, chairman of the Hong Kong Stock Exchange, attend a listing ceremony in Hong Kong, China, July 16, 2010. Agricultural Bank of China's shares were set to start trading in Hong Kong Friday. (Xinhua/Lui Siu Wai)

Xiang Junbo, chairman of Agricultural Bank of China (L) and Ronald Arculli, chairman of the Hong Kong Stock Exchange, attend the company's listing ceremony in Hong Kong, China, July 16, 2010. Agricultural Bank of China's shares were set to start trading in Hong Kong Friday. (Xinhua/Lui Siu Wai)

People pose for a group photo during a listing ceremony held in Hong Kong, China, July 16, 2010. Agricultural Bank of China's shares were set to start trading in Hong Kong Friday. (Xinhua/Lui Siu Wai)

HONG KONG, July 16 (Xinhua) -- Agricultural Bank of China (ABC) rose 2.2 percent in its Hong Kong trading debut Friday, a day after its listing in Shanghai, as the main rural lender in China rolled out a massive initial public offering worth up to 22.1 billion U.S. dollars.

Experts pointed out that the successful listing of ABC in Hong Kong, which is the last of the China's "big four" state-owned commercial lenders, not only reflects strong confidence of the international investors towards the prospect of the Chinese banking sector, but also adds to depth of Hong Kong's capital market and solidifies the city's role as an international financial center.

On the listing ceremony in Hong Kong, ABC Chairman Xiang Junbo said the bank's extensive network of both urban and far-flung rural branches creates an advantage of the bank in the market competition with other large lenders. And the bank has huge growth potential because China's rural areas are the next frontier for economic growth.

Xiang's words have been echoed by the acts of a lot of institutional investors since the bank launched a global road show for its H-share IPO.

Lured by the bank's growth potential, big investors seemed anxious to buy in. "Cornerstone" investors of the Hong Kong IPO include some of the city's biggest tycoons and also Qatar Investment Authority, Kuwait Investment Authority, Britain's Standard Chartered Bank, Dutch bank Radobank Nederland, Australia' s Seven Group Holdings Ltd. and Singapore's Temasek Holdings.

To Hong Kong, the success of ABC's listing means more than a boost to the city's bourse.

"The successful listing of the bank in Hong Kong proves that the city retains its strengths as a financial center because of its links with the rest of the world as well as the mainland," said Ronald Wan, managing director of China Merchant Securities in Hong Kong.

The Hong Kong Stock Exchange has been the market of choice for listings of a lot of Chinese companies, who want to seek the advantage of the "world city" with its financial markets more attuned to the standards of the global capital markets and its clear commitment to the rule of law, said Wan.

For ABC and other large Chinese companies listed in Hong Kong, in addition to raising capital to fund further investments both in China and abroad, they also manage to improve corporate image in the international market and expand marketing channels, as well as to establish an effective corporate governance structure under strict supervision and learn management expertise, said Peter So, Head of Research Department of China Merchant Securities in Hong Kong.

And Hong Kong is also taking advantage of its proximity to the Chinese mainland in serving as a base for a number of institutional investors focusing on the mainland companies, which further solidifies Hong Kong's role as an international financial center.

"Hong Kong is a global metropolis and also China's main window to international capital. Its intermediaries of capital will continue to operate that way in the future," said So.

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