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Postal Savings Bank of China makes tepid trading debut in Shanghai as investors collectively shun banking industry

Daniel Ren in Shanghai ren.wei@scmp.com

Postal Savings Bank of China (PSBC), the mainland's biggest bank by number of branches, got off to a slow start on the Shanghai Stock Exchange on Tuesday.

Its shares opened at 5.60 yuan (US$0.80), or 1.8 per cent higher than the initial public offering price of 5.50 yuan. It eventually closed the first day of trading 2 per cent higher at 5.61 yuan.

The biggest IPO in China since 2010 had been surrounded by suspicions about its trading debut, with bearish investors expecting its shares to fall below the offering price, a rare scenario on the mainland Chinese stock market.

In China, initial public offering shares are seen as safe bets since most companies jump at least 30 per cent on the first trading day.

"A small gain [in share price] was expected," said Ivan Li, asset manager with Shanghai-based Loyal Wealth Management.

PSBC could raise as much as 32.73 billion yuan if it exercises its greenshoe option in a secondary listing, which would make it the largest offering on the mainland Chinese stock exchanges surpassing Guotai Junan Securities' 30 billion yuan IPO in 2015. The secondary listing followed its IPO in 2016 when the mainland's fifth-largest bank by assets completed fundraising of US$7.3 billion in Hong Kong.

Its A shares are now trading at a 20 per cent premium to H shares, which closeed flat at HK$5.21 on Tuesday.

On Saturday, PSBC said in a stock exchange filing that its parent China Post Group planned to spend at least 2.5 billion yuan during the 12-month period from December 10 to increase its holding in the listed subsidiary. The controlling shareholder, which owns 64.8 per cent of the bank, did not set a price range for the share purchase plan.

"The announcement was aimed at bolstering investor confidence," said Zhou Ling, a hedge fund manager at Shanghai Shiva Investment. "But investors are shunning bank stocks nowadays and it is still likely that the shares would crash below the offering price in the coming trading days."

On November 26, Hangzhou-based China Zheshang Bank rose by a mere 0.6 per cent on its debut in Shanghai before it dropped below its offer price the following day.

PSBC began as the deposit-taking subsidiary of the country's postal service until it was granted a bank license in 2007. The company now operates a network of 40,000 branches acoss China, with 168,000 employees on staff and 600 million individual customers.

Its net profit rose 16 per cent to 54.29 billion yuan in the first nine months this year from a year earlier, according to its financial report.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2019 South China Morning Post Publishers Ltd. All rights reserved.

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