The trading debut of shares of Bank of China (BOC), one of the country's "big four" State commercial banks, gave a big shot in the arm to China's stock market after years of sluggish trading.

The new number one blue chip will boost confidence in the ongoing share-merger reforms. With its equities totalling 253.8 billion shares, dwarfing the former front-runner Sinopec Corp, BOC is bound to serve as a key stabilizer in the domestic stock market.

BOC has fully demonstrated its impact on the Chinese stock market since the very start of the first trading day.

Its shares began trading at 3.99 yuan (US$0.49) yesterday, up 29 per cent from the initial public offering (IPO) price, hoisting the benchmark Shanghai Composite Index by 73 points to a two-year new high of 1,755.

Though the domestic stock markets have already hosted several listed companies who had first floated their shares on overseas markets, none of them is on a par with the bank in terms of its size or significance.

The return of BOC, which recently raised US$11.2 billion with its share offering in Hong Kong, the world's fourth-largest IPO, has considerably improved both the structure and quality of Chinese shares.

Such a heavyweight from the banking sector has immediately increased the proportion of domestic shares issued by companies from the service sector.

Because an overwhelming majority of China's 1,200-odd listed companies used to be industrial companies, the domestic stock market has failed to act as a necessary barometer of the Chinese economy for years. The rapid growth of the service sector, particularly the financial sector, is one of the most significant changes the Chinese economy has witnessed in recent years.

It is believed that the inclusion of one of the country's key lenders will help enable the stock market to better reflect the growth of China's financial sector.

BOC also contributes to the improvement of the overall quality of domestically listed companies.

Stricter regulation in overseas stock markets was generally deemed as a guarantee for the quality of Chinese companies listed there. By first qualifying itself for listing in Hong Kong, BOC has already proved its quality with standards higher than those for domestically listed companies.

Moreover, yesterday's successful trading debut of BOC shares also indicated that the depth of domestic stock markets has substantially increased since the country undertook a series of critical stock reforms.

The strong performance of the IPO on its first trading day shows liquidity is no longer a concern as investors' confidence grows. That is good news for other domestically listed companies to speed up their share-merger reforms.