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Chinese IPO world's biggest

CHINA State Construction Engineering Corp plans to raise as much as 50 billion yuan (US$7.31 billion) in the country's biggest initial public offering since October 2007.

The country's largest housing contractor will issue 12 billion shares at between 3.96 yuan and 4.18 yuan each, according to its statement to the Shanghai Stock Exchange yesterday. Online subscription to the IPO will start today.

Analysts expected the new share issuance may suck up 1.6 trillion yuan as investors moved funds toward the new listing.

"The Shanghai Composite Index, which has rallied nearly 80 percent so far this year, may face short-term fluctuation due to the IPO, but the recovery will extend over the middle term," said Tu Jun, an analyst at Shanghai Securities Co.

He said the new IPO will not fundamentally change the upward trend of the market as investors have already digested the news.

State Construction's IPO is the biggest on the Chinese mainland after PetroChina raised 66.8 billion yuan in October 2007 and also the world's biggest since March 2008 when Visa Inc netted more than US$19 billion.

The company plans to use the funds to expand residential construction as a surge in bank lending has boosted the housing market.

State Construction's profit tumbled 44 percent last year to 4.92 billion yuan because of the slowing property market, rising raw material prices and higher tax payments. It forecast a recovery this year backed by the government's 4-trillion-yuan stimulus package.

The company is the fifth to launch an IPO after the China Securities Regulatory Commission resumed IPOs after a nine-month hiatus.


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