China AgBank share trading gets off to a slow start

Investors are wary about the state bank's ability to modernise

Shares in the Agricultural Bank of China ended their first day of trading almost flat. They had been expected to gain as much as 5%.

The new shares closed the day's business in Shanghai with a 0.8% rise to 2.70 yuan ($0.40; £0.26).

In morning trading they rose 2.7%, before falling back.

The bank could still be on target to raise a record $22bn (£14.4bn) in the initial public offering (IPO).

But this will not be clear until the second portion of the shares begin trading in Hong Kong on Friday.

Uncertainties

Agricultural Bank of China failed to excite investors during the first day of trading in its shares as investors were fretting about whether the bank's bosses could transform it into a modern, profitable concern and as the markets looked shaky.

"The debut reflects worries over slower growth and rising bad loans at Chinese lenders, and continued weakness in the stock may prompt a renewed slump in the overall market," said Liu Jun, analyst at Changjiang Securities in Wuhan.

The lacklustre trading also underscores the challenges ahead for other big Chinese banks, which are hoping to raise billions of dollars from the markets to shore up their balance sheet.

Chinese investors are watching closely to see whether this massive IPO might help lift the beleaguered stock market in Shanghai.

The Agricultural Bank of China's share offering makes it the third largest component on the main China index.

The Shanghai bourse has lost about 25% of its value since the beginning of the year.

Concerns about slowing economic growth here, and problems overseas in key markets such as Europe, are said to be worrying investors.