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China's Bank of Communications Makes Solid Debut

Investors have responded positively to China's Bank of Communications debut on the Hong Kong stock exchange, while Britain's Standard Chartered Bank has acquired a stake in one of Vietnam's fastest growing lenders.

China's Bank of Communications opened strongly on the Hong Kong stock market Thursday, with shares jumping more than 12 percent. The company raised $1.9 billion in one of the biggest share offerings so far this year.

The Shanghai-based bank, known as BoCom, is the first of China's state-controlled banks to list its shares on a stock market outside the mainland.

Agnes Deng, a fund manager at Standard Life Investments in Hong Kong, says the bank's placement in a stock market that thrives on foreign trading is a key reason for strong investor interest. "It is actually the first Chinese bank listed overseas," she said. "That's why a lot of retail investors who didn't have exposure in terms of investing in China's financial sector … now they have a chance."

Global banking giant HSBC has already bought a 20 percent stake in BoCom, boosting investor confidence. But many analysts are still wary of the bank's long-term prospects, in part because of its large amount of unpaid loans.

Many investors also are waiting for the share offerings of China's bigger banks, such as China Construction Bank, due to list later this year.

Investors also welcomed China's move to include state-run, industrial giants Baosteel and Yangtze Power in its ongoing sale of $200 billion worth of state-held shares.

Analysts say the inclusion of the two blue-chip companies addresses complaints the government had withheld its stronger companies in its sell-off plan.

The United Kingdom's Standard Chartered Bank has spent $22 million to acquire an 8.5 percent stake in Vietnam's fast-growing Asia Commercial Bank.

The move reflects increased outside interest in Vietnam's economy, which has grown around seven percent a year for the last five years. But South Korea's economy continues to sputter. The Bank of Korea says consumer confidence dropped dramatically in the second quarter of 2005.

The increased pessimism is a further indication that an economic turnaround for South Korea is still beyond reach.