Most Chinese stocks fell on Wednesday although a strong debut by Bank of China lifted the benchmark Shanghai index. China's second largest bank closed at 3.79 yuan, up 23 percent from its domestic initial public offer price of 3.08 yuan and in line with the expectations of many analysts. The shares rose as high as 4.05 yuan in the opening minutes.
The bank's sheer size pushed the Shanghai index up as much as 4.5 percent to a 27-month high of 1,757.472. The index, which ended up 2.2 percent at 1,718.555, would have fallen without the boost from Bank of China, traders said. Most Shanghai stocks dropped, with 527 shares down versus 213 gainers.
Turnover in Shanghai A-shares was only moderately active despite the listing, at 32.3 billion yuan ($4.04 billion) compared to 32.6 billion on Tuesday. "Investors pulled out of other stocks to put their money into Bank of China," said analyst Cao Xuefeng with West China Securities.
Banking stocks led declines as funds chased Bank of China, now the market's largest bank. China Merchants Bank Co Ltd, the second-largest Shanghai-listed lender, fell 4.3 percent to 7.56 yuan.
One bank to buck the trend, however, was Shenzhen Development Bank, which edged up 0.12 percent to 8.05 yuan after it estimated on Tuesday night that first-half net profit had risen between 150 and 200 percent. Sinopec, replaced by Bank of China as the market's largest-capital stock, closed 2.47 percent lower at 5.92 yuan.
Some traders said the market would soon stabilise as Bank of China found a comfortable level near its current price. Many traders and analysts see 3.80 yuan as a reasonable price for the short term, before the bank enters a long-term uptrend in line with its growing business. But financial counters in particular will remain vulnerable to profit-taking in coming days, said West China Securities' Cao. The benchmark index has gained 48 percent since the start of this year.