BEIJING, June 1 -- Shares of Bank of China Ltd., the nation's No. 2 lender, rose on their first day of trading in Hong Kong after investors ordered about 17 times the stock on offer during its US$9.73 billion initial public offering, according to the Bloomberg.

    The shares were up 11 percent to HK$3.275 (39.70 US cents) at 10:24am in Hong Kong, compared with the IPO price of HK$2.95.

    The Beijing-based lender last week completed the biggest IPO in six years as investors bet average annual economic expansion of about 10 percent in the past three years will sustain loan growth. Investors shook off concerns over a slide in emerging markets that saw the Morgan Stanley Capital International Emerging Markets Index, which tracks shares of 26 developing countries globally, tumble 10.76 percent in May.

    Bad loan ratio at Bank of China, which received US$22.5 billion in a bailout from the government in 2003, may be 4.39 percent by the end of this year, down from 5.51 percent in 2004, according to UBS AG, one of the sale's arrangers. Bank of China forecasts net income to jump 27 percent to US$4.1 billion this year as increased demand for financial services and improved lending practices boost profit.

    The bank attracted about US$164 billion of demand, including about US$129 billion of orders from institutional and corporate investors, three bankers involved in the deal said on Tuesday.

    Individual investors in Hong Kong ordered 70 times the shares offered to them, the company said in a statement. That is equivalent to US$35 billion of demand. Individual Hong Kong investors made 954,024 applications, it said.

    The IPO was the biggest since AT&T Inc.'s wireless unit sold US$10.6 billion of shares in 2000. The sale also tops the US$9.2 billon offer by China Construction Bank last year, and may swell to more than US$11 billion should the arrangers exercise an option to sell more stock to meet demand.

    Bank of China shares sold for about 2.18 times the company's estimated book value for 2006. China Construction Bank is trading at about 2.43 times book value and Bank of Communications is at about 2.65 times book value.

    Bank of China's fund-raising was completed amid a slump in global stock markets, driven by concern that the US Federal Reserve will keep raising interest rates to ward off inflation. Appetite for Chinese bank shares will be tested again this year because Industrial & Commercial Bank of China plans to sell as much as US$12 billion in stock.

    Hong Kong's benchmark Hang Seng Index has dropped 7 percent to a six-week low since Bank of China started selling shares on May 11. China-linked shares in Hong Kong fell after the People's Bank of China pledged to step up efforts to rein in lending to slow down an economy that grew 10.2 percent in the first quarter.

    A surge in bank loans has fuelled the jump in investment this year. New yuan lending more than doubled to 317.2 billion yuan (US$39.5 billion) in April from a year earlier, the central bank said on May 15. In the first four months, new yuan lending totaled 1.58 trillion yuan -- almost two-thirds the central bank's target for all of 2006.

    Bank of China advanced 35 percent of its US$177 billion in corporate loans to domestic manufacturers last year. The company aims to expand loans to individual customers and boost fee income to counter slower lending growth to companies.

    Bank of China -- founded in 1912 -- held a monopoly on the nation's foreign-exchange dealings and overseas banking from 1949 to 1994. The lender, with about 11,600 outlets worldwide, served 118 million retail customers.