The fervour among mainland Chinese investors for new listings continued unabated on Tuesday as shares in Bank of Communications surged 71 per cent in its first day of trading in Shanghai, in spite of continued official warnings about the risk of a stock market bubble. Analysts had expected a sharp rise in the company’s share price given strong demand during the offering, but the actual jump exceeded expectations. BoCom shares shot up from an offering price of Rmb7.90 to Rmb14.99 in early trading, before closing at Rmb13.54. The price rise gives HSBC a paper profit of $11.8bn on its initial 2004 investment of $1.7bn in BoCom, for a stake of just less than 20 per cent. Separately, the FT reports that quarterly net earnings at HSBC Finance Corporation — HSBC’s US subsidiary — dropped 39 per cent to $541m as the lender almost doubled its provision for credit losses, in a further sign of the deterioration of the sub-prime lending market in the US.
