By Li Zengxin (chinadaily.com.cn)
Updated: 2007-09-20 16:57

The Chinese market dropped a little yesterday but started surging today. However, industrial experts said the positive effect of the interest rate cut of US might be offset by the injection of a slew of large cap stocks aiming to address excessive liquidity in the market.

China Oilfield Service Ltd began online subscription for its 500 million A shares, priced at 12.88 yuan to 13.48 yuan today. The number of shares is lower than the originally expected 820 million. Individual investors may apply for the online portion as of today, with maximum bidding price of 13.48 yuan. The online portion has 325 million shares, accounting for 65 percent of the total.

China Construction Bank announced yesterday that its share price was set at 6.45 yuan, the upper band of the indicative price range. The country's second-largest commercial bank has attracted a record 2.26 trillion yuan of subscription funds in a Shanghai IPO. The price represents a price to earnings ratio of 32.9.

It also means the bank could raise up to 58.05 billion yuan in its IPO and become the largest domestic offering, exceeding Industrial and Commercial Bank of China's 46.64 billion yuan last October in the domestic market in a simultaneous listing in Shanghai and Hong Kong.

China Shenhua Energy Co Ltd, China's largest and world's second-largest coal miner, has kicked off a road-show for its 1.8 billion A-share issuance in Beijing, Shanghai, Guangzhou and Shenzhen yesterday. Hong Kong-listed Shenhua may raise 76 billion yuan from the IPO, calculated by its HK$44 closing price today.

In the meantime, the country is stepping up efforts for its corporate bond market. In its latest move, the Shenzhen Stock Exchange yesterday released a set of detailed rules governing corporate bond issuance. It also set the fee rates for the issuance.

The Shanghai Stock Exchange revised its corporate bond trading rules on Tuesday and lowered the entry limits for companies wishing to issue bonds. The new rules also stipulate the responsibilities of bond credit rating agencies and specify rules for information disclosure.

The China Securities Regulatory Commission (CSRC) has approved China Yangtze Power's application for issuing 8 billion yuan corporate bonds.

China Yangtze, the first listed company to issue corporate bonds after CSRC released a rule governing corporate bond issuance last month, will issue its first batch of five- or 10-year bonds, amounting to 4 billion yuan, as early as this month. The bonds are expected to carry a coupon rate of around 6.2 percent. At the non-discounted issue price, the yield of the proposed China Yangtze bonds would be about 170 basis points above that of treasury bonds, investment analysts said.

In less than one month, twenty firms, including China Vanke, Huaneng Power International, Poly Real Estate Group and Gemdale, have filed applications for corporate bond issuance, the Securities Times reported. These companies may target raising as much as 36 billion yuan for the bond sales, which may further drain the floating capital from the market, analysts said.

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