AIA shares hit an intraday high of HK$23.15, before closing at HK$23.05, or 17.12 per cent above its offer price of HK$19.68. AIA recorded HK$49.4 billion in trading turnover yesterday, accounting for more than a third of Hong Kong's main board total and it was the largest for a single listed company on its first trading day, the exchange said.

AIA's market capitalisation yesterday stood at HK$277.61 billion, the 11th largest on the stock exchange.

As a result of AIA's large market capitalisation, investors are expecting the insurer to be added to major equity benchmarks, said Patrick Yiu Ho-yin, the managing director at CASH Asset Management.

CLSA also estimated AIA would have a 5 per cent weighting in the Hong Kong index.

'So some fund managers have bought AIA shares and sold other heavyweight constituent shares,' Yiu said.

That helped send the Hang Seng Index down yesterday by 0.49 per cent, or 114.54 points, to 23,096.32. The benchmark has now dropped for two consecutive weeks after advancing in the seven previous ones.

The listing prospectus said AIA sold 6.5 per cent of its offering to a number of corporate investors - including sovereign wealth fund Kuwait Investment Authority - who would have their holdings locked up for six months following the flotation.

Pre-listing trading of AIA shares was the highest on record, according to broker Phillip Securities, which operates the only platform in Hong Kong for trading of such shares.

The turnover of AIA shares before listing was HK$234.2 million, said the broker.

AIG plans to use some of the proceeds of the AIA sale to pay back the roughly US$100 billion it still owes the US government after its 2008 rescue.

It still owns about 33 per cent even with the exercise of the greenshoe option.

But AIA will not receive any capital in the offering and its future growth prospects remain weak.

In a research note, Patricia Cheng, an analyst with CLSA Asia-Pacific Markets who had earlier argued that the Prudential bid for AIA was overvalued, said the valuation of the AIA offering was also too high given its low-growth prospects.

AIA has already lost the top positions among foreign insurers operating in China, in Hong Kong and Singapore, Cheng said.

According to data-provider Dealogic, the AIA offering was the largest listing on the Hong Kong stock exchange on record - surpassing the US$16.1 billion raised by ICBC from its H-share portion in 2006.

With the exercise of the over-allotment option, AIA's offering becomes the world's third largest, behind the listings for Agricultural Bank of China (US$22.1 billion) and ICBC (US$21.9 billion).

Brought to market ... at last

September 2008: AIG is hit by liquidity crisis and is unable to pay up collaterals as a result of reinsuring mortgages or mortgage-backed assets. It receives a US$182.5 billion bailout from the US government

October 2008: AIG sells assets to repay its debts and offers Hong Kong-based Asian life insurance unit AIA for sale for US$20 billion

February 2009: Bidding starts but no buyer is selected

May 2009: AIG says it will float AIA on the Hong Kong stock exchange

March 2010: Prudential says it will buy AIA for US$35.5 billion in cash and stock. Hong Kong listing is put on hold

June 2010: Prudential's plan to buy AIA from AIG collapses after Prudential shareholders baulk at the price

July 2010: Mark Tucker, the former chief executive of Prudential, is appointed to replace Mark Wilson as executive chairman and chief executive of AIA

September 2010: AIA's Hong Kong listing plan is revived, with plans to raise up to US$15 billion; the IPO could fetch as much as HK$159 billion if the underwriters use their over-allotment option to increase the offering to a maximum 8.08 billion shares

October 2010: AIA goes public; all the net proceeds go to AIG to repay the US government

SOURCE: BLOOMBERG