China International Capital Corp surged 33% in its debut on the Shanghai stock exchange on Monday as investors bet the country’s fifth-biggest securities firm will benefit from a government push to accelerate capital market reforms.
One of the lead underwriters for the world’s biggest IPO from Ant Group, CICC raised roughly $2 billion in its own share offering to fund expansion plans.
Its shares rose as much as 44%, the limit allowed for debuts on Shanghai’s main board, although they later pared gains to stand at 37.7 yuan. Even so, its Shanghai shares are currently trading at a premium of 144% to its Hong Kong-listed shares.
Companies which have dual listings for Hong Kong and Shanghai will typically see a very large premium for their shares in Shanghai, where trade is dominated by retail investors. The current average premium is 44%.
Benefiting from a flurry of new listings in China, CICC ranks 5th globally for underwriting IPOs so far this year, compared with 9th a year earlier, according to Refinitiv data.
Ant’s IPO, which has raised $37 billion including a greenshoe option, will further boost CICC’s fee earnings and global league table rankings this year.
But CICC also faces growing competition after China in April fully opened up its securities sector, enabling global banks such as JPMorgan, Goldman Sachs and UBS to move toward full ownership of their China businesses.
CICC said in a statement on Monday it will solidify its strength in investment banking and trading, while ramping up growth for its wealth management business.
It was established in 1995 as China’s first investment banking joint venture with a foreign firm, counting Morgan Stanley as a major shareholder. Morgan Stanley exited CICC in 2010.