What is set to be the largest listing in China since 2015 is facing a major stumbling block: investors are losing interest in the mainland's stocks.
Postal Savings Bank of China, a government-operated lending entity, aims to generate around 28.4 billion yuan ($4 billion) in what would be the largest onshore share sale since 2015.
This followed a wave of initial public offerings that diminished rapidly, in the wake of slumping trading activity and a steady decline in new stock accounts, reflecting a lack of exuberance on the market in China.
The IPOs contrasts with the start of 2019 when for the first time in years, turnover exceeded the 1 trillion yuan mark and multiple gauges roared in bull markets.
The twists and turns of US-China trade negotiations, a slowing economy and weak corporate earnings have since eroded investor confidence.
Lackluster debuts on the new "star market' in Shanghai have not helped either, with the board losing its brilliance in a flood of issuance.
According to data compiled by Bloomberg, seven of the 37 shares offered on the A-Share market since October 29 have sunk below their normal initial public bid price.
"Because the market lacks money-making opportunities, investors are leaving the stock market," said Jiang Liangqing, a money manager at Ruisen Capital Management in Beijing. "It has become quite the norm for debut IPOs to fail," he said.
Turnover on the continental exchanges dropped by 74 percent from the peak of March as of Thursday. After August, the Shanghai Composite has not changed by more than 2 percent, while the turnover for 30 days has been at its lowest after the first quarter of 2018.
Since September, the number of new stock trading accounts dropped 18 percent in October, the third monthly fall in a row.
Postal Bank, one of China's largest state-owned lenders, would potentially be the fourth largest listing in the world this year behind Alibaba Group Holding Ltd's $11 billion share sale this month, Uber Technologies Inc.'s $8.1 billion IPO in May, and Budweiser Brewing Co.'s stock sale in September.
The subscription date for the Shanghai listing by Postal Bank is Thursday, according to a stock exchange filing. "Postal Bank will face pressure under the current market conditions as a large-cap portfolio," said Yang Delong, First Seafront Fund chief economist.
"The stock volatility is small and there is not an excess of liquidity. There is a chance that some retail investors will want to withdraw from the subscription," Yang said.
