SHANGHAI, China (AP):

China expects plenty of cause for celebration when Industrial & Commercial Bank of China's record-smashing initial public offering begins trading Friday, likely boosting markets already trading at record or multi-year highs.

Investors who failed to get the shares they wanted in the IPO, which raised a record US$21.9 billion, are expected to bid state-owned ICBC's shares up by 10 percent to 15 per cent in both Hong Kong and Shanghai, analysts say.

"There's a mania for ICBC, so capital is bound to swarm into the market. People may sell off their other shares to invest in ICBC," said Peng Yunliang, a senior analyst at Shanghai Securities.

ICBC's is China's first dual IPO, with shares beginning trading simultaneously in both markets. The strategy, likely to be used more in the future, has enabled China's biggest lender to tap strong demand in both the mainland and overseas markets.

Overwhelming demand

The Beijing-based bank priced its shares at HK$3.07 dollars (US$0.39) in Hong Kong and at an equivalent 3.12 yuan (US$0.39) in Shanghai, citing overwhelming demand from investors. Both were priced at the top end of the indicative range.

Including the overallotment option, ICBC's stock sale raised US$21.9 billion - far exceeding the previous record, a US$18.4 billion IPO by Japanese mobile phone company NTT DoCoMo Inc in 1998.

The timing for taking the gargantuan bank, whose assets totalled 6.45 trillion yuan (US$816 billion) at the end of last year, couldn't be better.

After years of languishing in post dot-com bust and scandal-related doldrums, Shanghai's market has finally taken off, trading near five-year highs. Yuan denominated 'A shares' are up nearly 56 per cent since the beginning of the year.

And Hong Kong's benchmark Hang Seng Index surged 1.1 percent to a record high of 18,353.74 on Thursday.

Lacklustre outlook

Over the past decade, China's best companies, such as PetroChina Co, Sinopec Corp and China Mobile (Hong Kong) Limited, have chosen to list shares in Hong Kong and other markets outside China, given the lacklustre outlook for the domestic exchanges.

Current regulations prevent most mainland Chinese from openly investing in Hong Kong shares, and bar most foreign investors from buying yuan-denominated mainland Chinese shares.

But in the past year, regulators have carried out carefully orchestrated shareholding reforms aimed at shifting government-held, nontradable shares into the market.

Taken from the Financial Gleaner, Friday October 27, 2006.