CHINESE SHARES got off to a good start this week, jumping a full 2.1% today to 2,661.7 points led mainly by strong financial counter performance, notably a positive IPO response to Agricultural Bank of China's Shanghai listing.
The country also got a dose of stimulating news that its GDP was likely larger than neighbor Japan’s in the second quarter, which puts the world’s most populous nation on track to be the planet's second biggest economy by year end.
Agricultural Bank of China announced its Shanghai IPO tranche allotment was fully exercised, helping quell worries that a resurgence of creeping bearishness on capital markets worldwide and fears that A-share and Hong Kong investors were worried about liquidity were perhaps somewhat overblown.
China’s smaller Shenzhen Composite Index was even more impressive today, gaining 2.3% to finish at 1,128.0 points.
In the midst of the earnings season, energy and shipping counters also overperformed today on anticipated robust announcements to be made public soon.
Most analysts were however cautious about any sustained bull run as the national economy grew slower than expected in the second quarter, saying that 2,650 was a likely consolidation level for this week.
Agricultural Bank of China rose 0.7% today to 2.71 yuan in Shanghai.
However, analysts also said that the stronger than expected response to AgBank’s A-share listing in Shanghai – the last of China’s “Big Four” state-owned commercial banks to go public – could soon turn negative as the lender has absorbed more market liquidity than originally thought, leaving other listed firms with a smaller piece of the pie.
AgBank announced it managed to raise an additional sum of 9.1 bln yuan in the A-share portion of its initial public offering by selling another 3.4 bln shares via a greenshoe option at 2.7 yuan per share.
Following this maneuver, AgBank’s total IPO proceeds to date from the dual listing in both Hong Kong and Shanghai amount to 22.1 bln usd, the biggest ever IPO following domestic peer lender ICBC which raised 21.9 bln usd four years ago.
The bullishness in the financial sector today was contagious, with China Merchants Bank up 1.9% at just under 14 yuan, and Bank of Communications closing 1.6% higher at 6.3 yuan.
The lingering concerns over liquidity, especially from newly-listed lenders, will not go away anytime soon, as China Everbright Bank plans to go public with A-shares in Shanghai on Wednesday.
The 1.3% hike in the Baltic Dry Index (BDI) over the weekend helped shippers in China today.
China Cosco Holdings hit its daily 10.0% trading limit to finish at 10.31 yuan while China Shipping Development added 9.0% to 10.22 and China Shipping Container Lines rose 9.9% to 4.32.
Read about "China's Nasdaq" at: CHINEXT: Funds Rushing Into New Board At Frenzied Pace
