CRI听力:Agricultural Bank of China Gears up for World's Largest IPO

In a few days' time the world's biggest IPO (initial public offering) is set to take place as the state-run Agricultural Bank of China sells a 15 percent stake. The deal, which is to take place on the Hong Kong and Shanghai stock markets, is expected to raise over 23 billion US dollars. CRI's Dominic Swire has more.




The Agricultural Bank of China is the last of China's big four state-run banks to go public. If the organization succeeds in raising the 23 billion dollars it hopes it will make this the largest IPO in history.

The current record of 21.6 billion dollars was set by the Industrial and Commercial Bank of China in 2006.

A number of investors from the Middle East and Europe have already reportedly agreed to buy a significant amount of the offering.

Patrick Chovanec is an associate professor at Tsinghua University's School of Economics and Management. He says the shear size of the IPO is one factor that has attracted potential buyers.

"Because it's a state-owned Chinese bank a lot of investors feel they have limited downside, that, regardless of the problems the bank may encounter in the future, essentially it's guaranteed by the government and would be too big to fail."

Yet, despite the huge amounts of money being discussed, it was initially hoped the bank would raise even more capital.

Chovanec says the predicted figure has been scaled down because of current uncertainties about the Chinese market.

First of all there are general jitters in the Chinese stock market right now over government efforts to cool the economy, particularly the real estate sector to rein in bank lending, and also some concern about the eurozone crisis and how it will impact China.

Zhao Zhongxiu is an expert in economics at Beijing's University of International Business and Economics. He says the upcoming IPO is significant because it marks a huge step forward in the modernization of China's economy.

"This marks the change of China's banking system from state controlled to a modern financial system, so it's a corporatised, and will improve the corporate governance so the capability for risk control will be increased."

The bank is expected to set a final price for the IPO by July 7, with the shares listing in Hong Kong and Shanghai about a week later.

For CRI, I'm Dominic Swire.