SHANGHAI (Reuters) – China Telecom Corp, blacklisted by the U.S. government, surged on its first day of trade on Friday, defying a bearish market and following its $7.3 billion fundraising via public offering, the world’s biggest in 2021.
Shares of the telecom giant opened 5.7% higher, but ended the morning session up nearly 20%. The gain is more spectacular in a weak market that saw the benchmark index CSI300 slumping 2.4%.
The deal is the biggest A-share listing since PetroChina Co Ltd’s $8.9 billion Shanghai listing in 2007, according to Refinitiv data.
Liam Zhou, founder of Shanghai-based hedge fund Minority Asset Management (MAM), said the opening was weak, given China Telecom’s massive fundraising and huge premiums over its Hong Kong-listed counterparts.
But in the short-term, the stock price will get support from the so-called “green shoe” over-allotment mechanism, as well as its state shareholders, he said.
China Telecom’s Hong Kong-listed shares fell as much as 6.8% on Friday, trading at roughly half the price of its Shanghai counterparts.
U.S.-blacklisted China Telecom, which was kicked off the U.S. stock exchange in May, had raised 47.1 billion yuan ($7.3 billion) in Shanghai as it broadened its funding channel at home.
The debut follows a growing number of U.S.-listed Chinese companies that are selling shares publicly in Hong Kong or mainland China amid Sino-U.S. tensions.
The New York Stock Exchange delisted China Telecom, China Mobile Ltd and China Unicom Holdings from the bourse after the three firms were blacklisted under the former Trump administration in November last year.
The three firms were part of a list of 31 companies the United States blocked investment in because the government said they were owned or controlled by China’s military.
China Telecom opened at 4.79 yuan in Shanghai on Friday, compared with its offer price of 4.53 yuan. The stock ended the morning trading at 5.39 yuan.
In its Shanghai offering, China Telecom attracted a score of strategic investors, including tech giant Huawei, data security company DBAPPSecurity Co and Bilibili Inc.
The debut comes days after China Telecom reported a 27.2% jump in its first half earnings. The company also promised to raise the cash dividend ratio to 70% or above within three years of its Shanghai listing.
Earlier this week, China’s securities regulators accepted a domestic listing application from China Mobile, which aims to raise 56 billion yuan. China United Network Communications Ltd < 600050.SS>, a unit of China United Network Communications Group, went public in Shanghai in 2002.
($1 = 7.7910 Hong Kong dollars)
(Reporting by SHANGHAI NEWSROOM and Scott Murdoch in Hong Kong; Editing by Uttaresh.V and Sam Holmes)