What makes Chinese banks hot?
The world's biggest initial public offering coming from the largest bank of the world’s fastest growing economy has seen huge demand from institutional investors from across the world. The Industrial and Commercial Bank of China (ICBC) plans to debut in Hong Kong and Shanghai on Oct. 27. This will be the first IPO to be simultaneously listed on both stock exchanges.
If priced near the top of the range (which is almost certain), the issue will garner US$22 billion, beating the record of $18.4 billion set in 1998 by a Japanese mobile-telecoms operator NTT Mobile Communications Network Inc. The sale will also place ICBC among the ten most highly valued banks in the world, with a market capitalisation close to $130 billion.
ICBC is the latest in a series of massive IPOs launched by Chinese banks during the past year. Bank of China, the country’s second largest lender, raised US$11.2 billion with an IPO that was the fourth-largest on record. China Construction Bank, the mainland's no. 3 bank, raised US$8 billion in October 2005.
What makes Chinese banks ‘hot’? It’s the strong growth recorded by these banks in the sizzling economy that is luring the institutional investors. There is a scramble among the financial powerhouses of the world like Goldman Sachs, Morgan Stanley and Citigroup to gain a foothold into the Chinese banking system. For them, these banks are a sort of a proxy for China itself: vast, diverse, growing fast, and with extraordinary scope for internal restructuring. Economist terms the ICBC IPO as a single transaction that could sum up the knowns and unknowns surrounding China's red-hot economy. According to an Economist article, “…ICBC, however valuable, also reflects the murkier side of life in the Chinese economy. Political considerations often come first, information is unreliable, and openness in the banking system is questionable, despite conditions tied to China's entry into the World Trade Organisation.”
The world's biggest initial public offering coming from the largest bank of the world’s fastest growing economy has seen huge demand from institutional investors from across the world. The Industrial and Commercial Bank of China (ICBC) plans to debut in Hong Kong and Shanghai on Oct. 27. This will be the first IPO to be simultaneously listed on both stock exchanges.
If priced near the top of the range (which is almost certain), the issue will garner US$22 billion, beating the record of $18.4 billion set in 1998 by a Japanese mobile-telecoms operator NTT Mobile Communications Network Inc. The sale will also place ICBC among the ten most highly valued banks in the world, with a market capitalisation close to $130 billion.
ICBC is the latest in a series of massive IPOs launched by Chinese banks during the past year. Bank of China, the country’s second largest lender, raised US$11.2 billion with an IPO that was the fourth-largest on record. China Construction Bank, the mainland's no. 3 bank, raised US$8 billion in October 2005.
What makes Chinese banks ‘hot’? It’s the strong growth recorded by these banks in the sizzling economy that is luring the institutional investors. There is a scramble among the financial powerhouses of the world like Goldman Sachs, Morgan Stanley and Citigroup to gain a foothold into the Chinese banking system. For them, these banks are a sort of a proxy for China itself: vast, diverse, growing fast, and with extraordinary scope for internal restructuring. Economist terms the ICBC IPO as a single transaction that could sum up the knowns and unknowns surrounding China's red-hot economy. According to an Economist article, “…ICBC, however valuable, also reflects the murkier side of life in the Chinese economy. Political considerations often come first, information is unreliable, and openness in the banking system is questionable, despite conditions tied to China's entry into the World Trade Organisation.”
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