BANK OF CHINA UP 15 PERCENT IN STOCK DEBUT

UNCLAS HONG KONG 002260 SIPDIS SIPDIS STATE FOR EAP/CM AND EB TREASURY FOR OASIA GKOEPKE STATE PASS USTR USDOC FOR 4420 E.O. 12958: N/A TAGS: ECON EFIN HK CH SUBJECT: BANK OF CHINA UP 15 PERCENT IN STOCK DEBUT REF: HONG KONG 2094 ¶1. Having just concluded its initial public offering (IPO), the Bank of China (BOC) began trading stock today in Hong Kong. Shares rose 15.3 percent above the IPO price to HKD 3.40 (USD 0.44). Hong Kong's Hang Seng Index (HSI) fell 1.3 percent for the day, continuing a decline that has pulled the index down nearly 10 percent since a recent May 8 peak and raised concerns -- now dispelled -- about whether conditions favored the success of the BOC IPO. Some of the HSI's fall may reflect stockholders cashing out of constituent stocks in favor of BOC, which is not one of the shares that makes up the index. ¶2. BOC's IPO raised USD 9.7 billion, making it the largest such offering in Hong Kong's history, the biggest IPO ever for a mainland company, and the highest grossing IPO in the world since the year 2000. ¶3. The high degree of enthusiasm for BOC going public was carefully cultivated with sales of strategic stakes to foreign investors and culminated with thousands of Hong Kongers lining up to get a piece of the action. Last year, two of China's five largest banks, China Construction Bank and Bank of Communications, went public in Hong Kong, and another of China's large lenders, the Industrial and Commercial Bank of China (ICBC) is expected to list here shortly, perhaps this fall. The listing process has served as a catalyst for all of these banks to clean up balance sheets, upgrade internal controls, and modernize operations, all while helping Hong Kong rise to the position of the world's fourth-ranked capital raising center. Reftel provides additional background and context regarding the BOC IPO. Cunningham