Investors snap up the placement within hours, prompting the mainland lender to increase the amount to $1.89 billion State-owned Bank of China (BOC) increased the size of a sell-down of its Hong Kong flagship to US$1.89 billion from $1.5 billion yesterday after strong investor demand saw the original placement taken up in hours. The huge share placement unnerved the market, with analysts saying it could signal that big corporate players believe share prices have peaked. Adding to the market jitters was a HK$306 million cash call by Oriental Press Group's controlling shareholder, the Ma family. 'The placements were a key reason why the market reversed, especially the fact that they are placing old shares, which is always bearish,' said the head of sales at one investment bank. 'Two placements in one day is a bit too much.' The nation's biggest foreign exchange bank is placing 1.07 billion existing BOC Hong Kong (Holdings) shares, cashing in on a doubling in the share price in the past five months. Arranged by UBS, Goldman Sachs and BOC International Holdings, the shares - privately placed to institutional investors - represent 10 per cent of the firm, trimming BOC's stake to 66 per cent. The placing price is set at HK$13.70, or a 12.2 per cent discount to the stock's close on Friday. The big discount is designed to be a sweetener to investors because of the huge placing size, but it could weigh heavily on the bank's share price when trading resumes. The stock was suspended from trading yesterday at its own request. At the original size of US$1.5 billion, the share placement was already the largest attempted by a Hong Kong-listed company in the past three years. Sources said the response was overwhelming. 'The book building is meant to be on Monday and Tuesday. But the demand is so strong that in the first hour we started to take the orders. We have got US$1 billion,' one source said. Peter Burnett, the head of investment banking at UBS, said: 'The deal is a done deal. It's fantastic result for Bank of China.' Traders said the response to the bank's share placement was a strong vote of confidence in BOCHK's outlook and expectations of a steady upturn in Hong Kong's economy and property prices. The proceeds would go towards BOC for recapitalisation purposes. BOC has agreed not to sell more shares within the next six months. The move, the first fund-raising attempted by a Big Four state bank, is a sign banks are accelerating efforts to clean up their bad loans and shore up sagging capital ratios. BOC and China Construction Bank are vying to be the first Big Four state banks to go public. China Construction Bank is due to meet top investment banks this week for a flotation to raise an estimated US$5 billion. The fresh funds could go towards further cutting the bank's non-performing loan ratio - 18.07 per cent at the end of September - and help boost its capital adequacy ratios - at 8.2 per cent last year - to bring them closer to global norms. Fox-Pitt, Kelton banking analyst Sunil Garg said BOC planned the bad-loan clean-up before a public float by 2005.