Shares Rise in Asia in Anticipation of Agricultural Bank of China IPO


Shares in Asia closed higher Tuesday. In China the Shanghai Composite climbed 1.9% to 2,409 and in Hong Kong the Hang Seng rose 1.2% to 20,084. Japan's Nikkei 225 Index advanced 0.8% to end the day at 9,338.

Chinese banking giant Agricultural Bank of China is expected to raise about $20 billion in its upcoming IPO scheduled for July 15th and 16th. This could be the largest IPO ever, with 22.2 billion shares going in Shanghai and 25.4 billion shares in Hong Kong, says Bloomberg BusinessWeek. It has lured both corporate and private investors and people have been lining up in banks in Hong Kong and China, hoping to get in on the action. Pricing should be announced tomorrow, but expect leaks late tonight or early tomorrow.

According to Reuters, the offering is 20 times oversubscribed by institutional investors.

Other banking shares rose in China with Bank of China gaining 3.3%, Industrial & Commercial Bank jumping 2% and China Construction Bank climbing 2.9%.

Chinese commodity companies gained with Jiangxi Copper surging 2.9% and Aluminum Corp. of China, commonly known as Chalco, adding 1.7%.

Joincare Pharmaceutical Group, a company producing both Eastern and Western remedies as well as health foods, was among today's best performers, leaping 4.1%, along with Huadong Medicine, which surged 6%. Other healthcare companies also recouped recent losses with Shandong Dong-E E-Jiao-A, a company specializing in treating blood disorders, spiking 4.1%, Jilin Aodong Medicine Industry rallying 2.5% and Zhejiang Medicine advancing 3.6%.

In Hong Kong, it was real estate firms that boosted the index. China Resource Land climbed 3.6% after announcing sales were up for the first half of the year, according to Bloomberg. New World Development shot up 3.3%, China Overseas Land rose 3%, Hang Lung gained 1.3% and Sino Land advanced 0.9%.

Also in Hong Kong, Foxconn clawed back 2% today after recent dips in the wake of suicides at the company's Shenzhen factory and promises of wage hikes for some employees. The mobile phone maker has also been stung by the plunging price of handsets, sharply narrowing the company's profits.

In Japan Fanuc, an industrial robot maker gained 1.4%. The company is expected to be a big player in outfitting Chinese factories that can afford it with robotic workers in an effort to sidestep a rising minimum wage.

Other gainers today included Daihatsu Motor. Part of the Toyota Motor Group, the company makes compact cars and surged 6.4% today. Investors also picked up shares of other Japanese carmakers. Isuzu and Mazda both rose 3%, Honda was up 2.2% and Toyota added 1.3%. A little optimism in China goes a long way in Asia these days.