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The Agricultural Bank of China has also announced the IPO price range for its Shanghai shares at 2.52 yuan to 2.68 yuan. Market insiders say this price range is reasonable. Its public listing won't have big impact on the market.
The current price-to-book, or P/B ratio of banking shares is between 1.7 to 1.9 at average, the price-to-earning, or P/E ratio is 8 to 10. For AgBank, if it finally selects upper limit of the price range 2.68 yuan, the P/B ratio will be 1.6 and P/E ratio between 8.2 to 8.7. Both are low compared to the industry average.
One investor said "I think the price is acceptable. It is close to market expectations."
One investor said "I think the price is a little bit low. The P/E ratio should be about 10. The shares will rise."
One investor said "I will subscribe for AgBank shares."
In addition to individual investors, large state-owned enterprises, overseas sovereign funds, hedge funds and private financial groups have all showed interest to AgBank's IPO. So far it has received subscription for 70 billion shares, 16 times than planned.
But analysts say even based on the upper limit of its price, AgBank's listing will withdraw capital from the market less than 1 trillion yuan. It won't place too much pressure on market capital.
Liu Jingde, Vice Manager of Cinda Securities said "Capital will become tight in the market for a while as AgBank's IPO will absorb some capital. But the impact is only for the short term. In the long term, tens of billion yuan of capital raising won't change market overall performance."
Hong Kong analysts echo the view. They says AgBank will absorb more capital from the Hong Kong market. But for Hong Kong, an international financial center with substantial overseas capital coming in, the impact will be limited.
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