Near-Record Bids for Ping An's Shanghai Debut BUSINESS ASIA By Bloomberg

By Patricia Cheng

Shares of Ping An Insurance (Group) jumped 38 percent on their debut in Shanghai Thursday, bucking a slump in Chinese equities after the world's biggest stock sale by an insurer drew near-record bids from investors.

The stock rose to 46.79 yuan, or $6.04, from its offer price of 33.80 yuan, closing at a 38 percent premium to its Hong Kong shares. Ping An, China's second-largest insurer, sold 38.9 billion yuan of shares. HSBC Holdings owns a fifth of Ping An.

Ping An's surge reflects demand for stock of Hong Kong-traded Chinese companies among mainland investors, who are banned from buying overseas equities. Yuan shares in China Life Insurance, the only other domestically listed insurer, more than doubled when they made their debut in January and are trading 70 percent above its Hong Kong stock.

"As a general rule of thumb, new stocks tend to go up in China regardless of market conditions," said Zhou Guang, an analyst at China International Capital in Beijing. "Scarcity certainly plays a part in Ping An's surge."

The debut came two days after Chinese stocks suffered their worst rout in a decade on concern a government crackdown on investing with borrowed money will end a rally that drove benchmarks to records. Fund managers and individuals ordered 28 times the shares on offer, betting Ping An will benefit from economic growth that averaged 10 percent over the past four years.

Ping An's Hong Kong-traded shares have more than tripled since they began trading on the city's exchange in June 2004. The Shanghai sale drew offers of 1.1 trillion yuan, second only to Industrial Bank, which attracted 1.16 trillion yuan of bids for its domestic share sale last month.

"It's got good long-term growth prospects," said Wu Jianfei, a fund manager at CCB Principal Asset Management in Beijing. "Life insurance companies are benefiting from China's economic change and rising consumer demand." Wu declined to say whether he bought the stock.

The sale pushed Ping An's market value to $41 billion, ahead of Allstate's $37 billion and Prudential's $32 billion. Allstate is the largest publicly traded U.S. home and auto insurer. Prudential is Britain's second-biggest insurer.

Chinese stocks have gyrated this week as investors grew skittish about possible government intervention in the market. The Shanghai Composite index, which tracks the bigger of China's stock exchanges, plunged 8.8 percent on Tuesday. It recovered 3.9 percent Wednesday, then fell as much as 3.3 percent Thursday.

The slump was a "normal correction" and the government has no plans to buoy the stock market, Zhu Jian, the Shanghai-based director of the China Securities Regulatory Commission, said Wednesday. "Market forces will continue to drive share prices," he said.

Hong Kong investors have soured on Ping An stock. The shares have dropped 20 percent this year, closing at a two-month low of 34.30 Hong Kong dollars, or $4.39, on Thursday on concern a tripling last year left them overvalued. They trade at 28 times forecast full- year earnings, compared with 11 times for American International Group.

Shares of China Life, Ping An's bigger rival, started trading in Shanghai at 18.88 yuan on Jan. 9, 30 percent below the previous day's closing price in Hong Kong. Since then, the H shares in Hong Kong have slumped 21 percent, while the yuan stock has fallen 13 percent.

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