Asia's equity markets are fast turning into a one-country show, with three huge China IPOs having hit the streets in June alone and no apparent end of new listing candidates from the People's Republic.
China Shenhua Energy Co, the country's largest coal producer and so far this year the world's largest IPO, raised $2.95 billion through CICC, Deutsche Bank and Merrill Lynch. Despite what appeared to be conservative pricing by the lead managers, the share price closed below the offer price when dealings began, a sign of a tricky equity market and concerns about the commodities cycle in China.
In contrast, the $1.88 billion IPO of mainland lender Bank of Communications managed by Goldman Sachs and HSBC (and in which the latter owns a 19.9% interest), received a rapturous response, particularly from the Hong Kong retail market. The public offering was oversubscribed 155 times and institutional orders 11 times the amount on offer. In early dealings the share price jumped to a healthy premium.
Bankers involved in several forthcoming China IPOs will be relieved by the Bank of Communications outcome – in particular, Morgan Stanley and CICC which are managing the purported $5 billion offering for China Construction Bank, which insiders insist is on track to launch later this year.