Sept. 19 (Bloomberg) -- Bank of Beijing Co. almost doubled on its first day of trading in Shanghai after investors ordered 127 times the stock on offer in the largest initial public offering by a Chinese city bank.

The stock rose 81 percent to close at 22.68 yuan from the offer price of 12.50 yuan, valuing China's biggest city bank at 141 billion yuan ($18.8 billion), more than Bear Stearns Cos.

Bank of Beijing benefited as the nation's $2.2 trillion of household savings chase new stocks amid near-record valuations for listed shares. China Construction Bank Corp. raised $7.7 billion yesterday after drawing 2.3 trillion yuan of orders --a sum greater than the market value of any company except Exxon Mobil Corp. and General Electric Co.

``When you have such optimistic market sentiment and so much liquidity, stocks are bound to skyrocket,'' said Zhu Minjian, a banking analyst at Fortis Haitong Investment Management Co., which manages $4.4 billion, including 9.8 million Bank of Beijing shares. ``Valuations on the secondary market are certainly at a high, if not unsustainable, level. So IPOs become a safe haven.''

Bank of Beijing last week raised 15 billion yuan after attracting a then-record 1.9 trillion yuan of orders from institutional and individual investors. At 29 times reported profit, the IPO shares were priced at about half of what stocks on the benchmark index sell for on average.

Valuations

The two banks' offerings brought the value of yuan- denominated stock sales this year past the record 171 billion yuan raised in all of 2006. Stocks on the CSI 300 Index trade at an average 53 times reported earnings, more than any other benchmark, after the measure surged 166 percent this year.

Citigroup Inc., the biggest U.S. bank, trades at 11 times earnings, according to data compiled by Bloomberg. The U.S. firm was overtaken in July as the world's largest bank by market value by Industrial & Commercial Bank of China Ltd.

Bank of Beijing is the third of China's 113 city-commercial banks to go public. Rivals Bank of Nanjing Co. and Bank of Ningbo Co., the first two such banks to hold initial share sales, raised a combined 11.1 billion yuan in domestic public offerings in July.

Chinese banks have raised more than $73 billion selling shares in the past two years as the fastest economic growth in more than a decade buoyed demand for financial stocks. That's given them the financial strength to increase loans to fund everything from car purchases to factories.

Expansion Limits

Bank of Nanjing's Shanghai-traded shares jumped 72 percent on their July 19 debut and the stock is now valued at 48 times estimated earnings, compared with 51 times for Bank of Beijing, according to Bloomberg data. Bank of Ningbo's shares in Shenzhen trade at 71 times forecast profit after tripling from their IPO price.

China's city banks, barred from expanding outside their hometowns until last year, need funds to compete with rivals that have more capital and had no geographic limits on operations. They control 6 percent of China's $6 trillion of banking assets, compared with 68 percent for the country's two largest types of banks -- state-owned and joint-stock -- which operate nationwide.

Bank of Beijing, the largest city bank by assets, operates 123 branches in the capital and one branch in neighboring Tianjin. It has 8.2 million individual account holders. Profit increased 27 percent last year from 2005, to 2.1 billion yuan.

ING Groep NV's stake in the bank fell to 16 percent after the IPO from 19.9 percent.

To contact the reporter on this story: Luo Jun in Shanghai at jluo6@bloomberg.net

Last Updated: September 19, 2007 03:48 EDT