China’s biggest IPO in four years faces a woeful start ahead of debut as a record number of investors decline their allotments
- Traders backtracked on 119 million shares of Postal Savings Bank worth a combined 653 million yuan, or 2.3 per cent of its secondary issuance on the Shanghai Stock Exchange
- The snub casts a pall over what should have been a high point for the bigger of China’s two stock markets
China’s biggest initial public offering in four years faces a woeful start ahead of next week’s trading debut by Postal Savings Bank of China, as a record number of investors declined to take up their allotted shares.
Onshore traders backtracked on 119 million allotted shares worth a combined 653 million yuan (US$92 million), or 2.3 per cent of its secondary issuance on the Shanghai Stock Exchange, according to a filing. This was the largest withdrawal since investors turned their backs last month on China Zhejiang Bank, causing the regional lender’s shares to fall below their offer price on the second day of trading, in the biggest listing flop in seven years on the bourse.
“The number of investors who subscribed online and then backed out is especially high, implying that retail investors are quite pessimistic about the company,” said Cui Xin, strategic analyst at China Galaxy Securities. “The overall sentiment on IPOs is quite gloomy.”
Postal Savings Bank, which began life as a deposit-taking subsidiary of the nation’s postal service, isn’t alone in the doldrums. Dozens of new banks and technology start-ups have fizzled in their trading debuts on the Star market in Shanghai, with their share prices falling below their offered prices, in stark contrast to the buzz and spectacular gains that used to greet first-day trades.
China’s securities regulator has had a hand in letting the air out of the bubble, with its recent relaxation of listing rules, which hastened the pace of companies going to market and increased the supply of new stocks in the market, Cui said.
