* Bank of Chongqing also had lacklustre debut
* Soft tone for bank IPOs comes as other lenders eye
* But online game firm Boyaa surges in first day of trade
By Denny Thomas and Elzio Barreto
HONG KONG, Nov 12 Shares in Huishang Bank Corp
Ltd became the second China bank in just over a week
to make a lacklustre Hong Kong debut, underscoring lukewarm
investor appetite for the Chinese banking sector despite a
likely raft of listings on their way.
The flat start for Huishang, which raised $1.2 billion in
the island city's biggest bank IPO in three years, follows weak
pricing for the offer, near the bottom of its marketing range.
The soft tone for bank listings comes as China Cinda Asset
Management Co Ltd, the nation's biggest bad loan manager, began
gauging investor interest for its up to $2 billion IPO this
week. The offer is expected to be priced in the first week of
Also monitoring the debut are other Chinese lenders,
including China Everbright Bank, Bank of Beijing and China
Guangfa Bank, which are among companies seeking to raise about
$11 billion through Hong Kong offerings over the next 8 to 10
In morning trade, Huishang Bank shares were changing hands
at HK$3.53, the same level at which the IPO was priced, after
hitting a high of HK$3.58. That compares with a marketing range
of HK$3.47 to HK$3.88.
Bank of Chongqing, the fellow Chinese provincial
lender which listed last week, was also trading below its IPO
price on Tuesday.
Some market participants said that of the two, Huishang,
which is based in the booming industrial heartland of Anhui
province, looks to be the better bet.
"It's fairly valued and is a better buy compared to recently
listed Bank of Chongqing, which counts local governments as its
key clients, said Jackson Wong, Tanrich Securities
vice-president for equity sales.
"Huishang is less risky because its business is more
retail-driven and it's one of the more recognizable banks in the
central parts of China," he added.
With the mainland IPO markets shut down by regulators for
more than a year, Chinese lenders are turning to Hong Kong to
bolster their balance sheets as bad debts show signs of picking
up in the world's second-biggest economy.
But the new offers have met with weak demand as investors
tend to prefer listed peers with a known track record of
At the IPO price, Huishang was valued at a forward
price-to-book ratio of 0.95, compared with the average P/B of
1.18 for Hong Kong-listed banks, according to Thomson Reuters
To overcome the weak demand, underwriters have been selling
more shares to cornerstone investors, who get guaranteed
allocations in return for agreeing to lock up shares for a
certain time. In Huishang's case, China Vanke Co Ltd
committed to buy about $400 million in shares, to become its
Huishang's debut contrasts with a flying start for Boyaa
Interactive International Ltd, China's largest
developer of online card and board games.
Boyaa, which raised about $127 million, shot up 30.3
percent, underscoring investor optimism over booming growth in
The company's offer was swamped by orders from small
investors, with the retail portion generating more than 832
times demand than the shares on offer, a company filing said on
Monday. The institutional tranche of the IPO was "very
Huishang hired BOC International, Citic Securities
International , JPMorgan, Morgan
Stanley and UBS AG as sponsors for the IPO.
It also tapped another 14 banks, including China
International Capital Corp (CICC), Citigroup, Guotai Junan
Securities and Nomura, to help manage the offering as