Price declines nearly 3 percent at closing in HK

The shares of China Everbright Bank Co Ltd, which raised HK$20 billion ($3 billion) in the biggest initial public offering this year, sank nearly 3 percent in their debut on Friday on the Hong Kong stock exchange, reflecting investor concern over the outlook for China's banking sector.

The shares closed at HK$3.87, down 2.76 percent on the offer price. Everbright, based in Beijing, is the 11th-largest bank on the Chinese mainland by market capitalization. It was the last large State-owned company to list in Hong Kong in 2013.

The bank set the offer price of its 5.08 billion H shares at HK$3.98 each on Dec 13, raising a total of HK$20.22 billion. That was toward the lower end of the price range, which was HK$3.83 to HK$4.27 per share.

In the pre-IPO "gray market", its share price dipped as much as 5.8 percent at one point before ending at HK$3.88 in Hong Kong on Thursday night.

"The listing will help to lift our capital adequacy ratio by 1.1 percentage points," said Guo You, president and executive director of the bank. According to its quarterly report, the bank's CAR was 9.65 percent as of Sept 30.

"Apart from listing in Hong Kong, we are also restructuring the business to boost profit margins," he said, adding that the bank has considered issuing preferred shares on the mainland.

On the mainland capital market, banking shares plunged in the final minutes of trading on Friday.

Both China Citic Bank Corp Ltd and China Construction Bank Corp were down by the 10 percent daily limit three minutes before the close. The banks' shares finished 8.67 percent and 6.16 percent lower, respectively.

On Thursday night, the People's Bank of China announced on its micro blog that it had carried out a short-term liquidity operation to inject liquidity into the financial markets.

Interbank trading was also extended by 30 minutes to allow banks to benefit from the measure.

The PBOC said that it would continue to inject liquidity into qualified financial institutions through such operations "when necessary".

The central bank supplied the market with 18 billion yuan through reverse repurchase operations on Dec 3. The PBOC didn't disclose the scale of Thursday's operation, but media reports said the bank injected 200 billion yuan $32.9 billion) into the market.