Shares in mainland China’s biggest initial public offering in more than four years received a lukewarm reception from traders as souring sentiment towards the country’s banking sector weighed on the debut of Postal Savings Bank of China, reported the Financial Times.
The rise of 2% on Tuesday in a market where double-digit gains on day one are typical followed signs of a dearth of demand for the offering, which raised RMB 28.45 billion ($4 billion) and could ultimately bring in RMB 32.7 billion if a green shoe option is exercised.
Margaret Yang, a market analyst at CMC, described the initial gains as “lousy”. She said investors had been put off bank stocks this year as slowing economic growth in China fed concerns about non-performing loans and the deterioration of banks’ asset quality. In recent months troubled banks have secured only 20-40% of funding they have sought to raise from the interbank market through negotiable certificates of deposit.
“It’s not lack of money but lack of interest in the banking sector,” Yang said, adding that PSBC’s numerous brick-and-mortar branches across the country were no longer a key advantage as consumers increasingly turned to digital banking.