Bank of China shares open 14% up

China's second-biggest lender saw its stocks climb from the opening price of HK$2.95($0.38; £0.20) each, to HK$3.38.

The over-subscribed float raised $9.7bn (£5.2bn) as investors tried to tap into strong growth and an expected surge in demand for financial services.

The flotation in China's principal foreign exchange bank was the world's biggest initial share offer since 2000.

'Strategic investors'

One analyst said the 14.4% first day gain was a "pretty pleasant surprise".

"I don't think anyone expected (it) would open so firm," said Tat Auyeung, a fund manager at Apex Capital Management.

"There's not a lot of free float in the market, given the fact that strategic investors have received large chunks of it.

"At the same time, the pre-float marketing has done a fairly good job in terms of explaining the bank's structure."

Loans quality

It has been reported that Bank of China may look to list its shares in mainland China later this year.

Last year, a consortium of international banks led by Royal Bank of Scotland spent $3bn on a 10% stake in Bank of China.

Some analysts had warned off investors, pointing out Bank of China's problems with bad loans, fraud investigations and antiquated computer systems.

But an emerging credit culture and the improving quality of loans has allayed fears.

The country's largest lender, Industrial & Commercial Bank of China, is planning a $10bn share flotation for later this year.

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