China Railway Construction Corp. drew about 3 trillion yuan ($420 billion) in the fourth-most popular initial public share sale in Shanghai, said two people with direct knowledge of preliminary numbers.
Demand for the sale was 135 times the offering, said the people, who declined to be identified before an announcement tonight. The Beijing-based independent builder of more than half of the country's rail links since 1949 may raise as much as 22.25 billion yuan in the Shanghai IPO.
The orders reaffirm demand for new stocks after China's benchmark CSI 300 Index dropped 21 percent from its peak in October. That prompted the China Securities Regulatory Commission on Feb. 25 to vow to tighten scrutiny of additional share sales by listed companies.
``Investors are moving their money to the primary market to hedge against the decline on the secondary market, as the returns are quite secure,'' said Wu Kan, who manages the equivalent of $41 million at Dazhong Insurance Co. in Shanghai. ``The first-day gain of China Railway Construction won't be amazing, but at least investors won't be running the risk of losing money.''
Li Tingzhu, board secretary of China Railway Construction, and Raymond Tang, a Beijing-based spokesman for Citic Securities Co., which is managing the sale, couldn't be reached in their Beijing offices.
Companies that sold shares on the Shanghai and Shenzhen stock exchanges since the beginning of last year have gained at least 14 percent, according to data compiled by Bloomberg. That makes China the best-performing of the world's five-largest IPO markets last year, according to Bloomberg data.
Institutions, whose bids helped set the price range for China Railway Construction's Shanghai share sale, demanded more than 340 billion yuan of stock, said the people, citing preliminary numbers. Investors, including individuals and institutions, ordered about 2.67 trillion yuan of shares through the portion of the offering open to all buyers, they added.
China Railway Group Ltd., PetroChina Co. and China Coal Energy Co. attracted more money for their first-time Shanghai share sales, according to company statements.
At least 11 of the 90 major global indexes tracked by Bloomberg lost more than 13 percent of their value this year as a U.S. housing market collapse and banking losses triggered concerns of a global economic slowdown. The CSI 300, the best- performing index globally in 2007, has shed 13 percent this year.
Worst-Performing New Stocks
Last year's biggest first-time share sales in China, the world's fourth-biggest stock market, including those of China Pacific Insurance Group Co. and China Coal, were among its worst-performing newly listed stocks, according to Bloomberg data.
China Coal had the slimmest first-day gain of newly listed stocks in the country since the beginning of 2007 when its shares started trading in Shanghai on Feb. 1.
China Railway Construction is also selling 1.706 billion shares in Hong Kong for as much as HK$18.25 billion ($2.3 billion). The shares are scheduled to be priced March 6.