Banking and securities regulators are believed to be stepping up efforts to minimise the effect on the banking system of high subscription rates on initial public offerings (IPOs) amid expectations that red-chip Shum Yip Investment could tie up more than $40 billion.
Speculation suggests Shum Yip, the commercial arm of the Shenzhen municipal government, could see its public offering subscribed by up to 300 times when it closes today.
This would be one of highest subscription rates seen but still well below the record achieved by Guangdong Tannery whose issue in December was subscribed 667 times.
Fears that at a rate of 300 times about $41.6 billion could be frozen in the banking system, sent the overnight interbank rate up 5.375 per cent yesterday afternoon.
Sources said the Hong Kong Monetary Authority was concerned about the matter and planned to meet with banks for talks. A Securities and Futures Commission (SFC) official said the commission had discussed the issue with the authority but talks were only at a preliminary stage.
Authority deputy chief executive Norman Chan said the authority would monitor Shum Yip's subscription rate but he believed the banking sector would not face any problems.
