China's AgBank up 2.2 percent in Hong Kong debut

But the limited gains paled in comparison to the double-digit increases posted by other major Chinese banks on their first trading days.

Priced at HK$3.20 ahead of the Hong Kong listing, the bank started trading at HK$3.25 and rose as high as HK$3.31 during the day before closing at HK$3.27.

On Thursday, Chinese investors were lukewarm toward the bank on its first day in Shanghai, with the stock closing 1 percent above its IPO price at 2.71 yuan. It fell 0.4 percent on Friday, closing at 2.69 yuan.

The Hong Kong IPO marked the international portion of the bank's dual-listing. Unlike the Shanghai bourse, the stock exchange in this semiautonomous southern Chinese territory is open to foreign investors.

The bank sold 25.4 billion shares in Hong Kong and 22.2 billion shares in Shanghai, raising US$19.2 billion. The total could rise to US$22.1 billion if underwriters exercise an overallotment option by Aug. 5 to purchase additional shares, according to the prospectus. If that happens, the listing would eclipse the global IPO record of US$21.9 billion set in October 2006 by another Chinese state-owned lender, Industrial & Commercial Bank of China Ltd.

The last of China's "big four" state-owned commercial lenders to list, ABC is seen as weaker and less profitable than its peers, given that it operates a costly network of far-flung rural branches and its non-performing loan ratio is higher than other major banks at about 3 percent. Bank executives, however, tout its strong presence in the countryside as an untapped engine for growth.

Chinese stock prices have also been weighed down by concerns about an overflow of new shares, down 25 percent from the start of the year.

While Chinese banks are considered the world's strongest after avoiding the credit turmoil in the West, local authorities have warned about a possible spike in bad loans after last year's lending boom unleashed by a government stimulus plan. The ratings agency Fitch warned earlier this week that some Chinese banks may be downplaying the scale of their lending with complex deals.

Agricultural Bank Chairman Xiang Junbo said Friday he was happy with the market reaction given the current conditions. The bank had little choice in the timing of the listing because Chinese regulators ordered banks to replenish capital after last year's lending spree.

"I think our stock has always been very popular. It hasn't been unpopular. You should know better than I what state the global capital markets are in," Xiang told reporters in Hong Kong shortly after the listing ceremony on Friday.

"I'm very happy with the stock price today," he said.

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