Agricultural Bank of China believe that significant financial demand will emerge in the countryside as rural incomes grow
Agricultural Bank of China (1288) is set to perform better locally after its lackluster Shanghai trading debut yesterday.

The local offering had a higher upside in the Hong Kong gray market than the bank's A-share debut.

The third-largest Chinese bank by assets closed at 2.70 yuan (HK$3.09), edging up 0.75 percent from its offer price of 2.68 yuan, weaker than market forecasts of an upside of 2 to 10 percent.

In the H-share portion, it rose up to 3.13 percent in the gray market that is the domain of institutional investors, according to the brokerage Instinet.

The brokerage said 15 million shares of AgBank traded at between HK$3.27 and HK$3.30. But the bank was less attractive to SAR retail investors, with only 8.4 million shares changing hands in the pre-debut trading session via local brokerage Phillip Securities, rising 1.56 percent to HK$3.25 from HK$3.20.

"The weak performance of AgBank's A shares was mainly due to investor concern about its asset quality and the high cost-to-revenue ratio," MF Global Hong Kong head of Asian financial equity research Steven Chan said.

AgBank's mainland-listed shares opened at 2.74 yuan - the intra-day high, which was 2.2 percent higher than its offer price - and hovered between 2.69 yuan and 2.74 yuan.

Turnover was 10.95 billion yuan, with 40.4 million board lots changing hands. Fund managers estimated there were orders for 1.1 billion A shares at above the IPO price.

"We are quite satisfied about the share's performance, which reflects investor confidence about our long-term development," AgBank president Zhang Yun said. "I look forward to the share performance in Hong Kong and I hope it will also be a good one, so it can generate a favorable return to investors."

"Significant financial demand will emerge in the countryside as rural incomes grow. I believe investing in AgBank's stock is also an investment in the future of the Chinese economy," vice president Zhu Hongbo said.