Overseas institutional investors have responded warmly to the IPO by the first of China's four biggest state- owned banks to list on a stock exchange, but there were concerns that the stock market agony of the past week might turn off small investors.

However, there was no discouragement evident among the 100 or so people who lined up outside HSBC's Kwun Tong branch well before opening time, waiting to collect their application forms and prospectuses - even though all investors have an equal chance at the shares, regardless of when they submit their paperwork.

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Sources close to the IPO described the first-day response as ideal and said some branches of the receiving banks had run out of application forms and prospectuses and had to ask the sponsors for more. No one was saying how many of the 2.5 million forms set aside for investors had been passed out.

Applications close October 19 and the share price will be set the next day.

A Mr Leung, who joined the line outside the bank at 7.30am, said he hoped to subscribe for 2,000 shares and cash out quickly with gains of HK$2,000 or HK$3,000. He shrugged off the correction that has shaved 900 points, or almost 6 percent, off the blue- chip Hang Seng Index since October 4. "It [the share purchase] will cost me about HK$3,000. I don't fear losing the money." (With the current price range, a board lot of 1,000 CCB shares is likely to cost about HK$2,424.)

Retail investors also seem eager to subscribe to the bank's IPO on margin, despite the hefty interest rates involved.

Small brokerage houses Phillip Securities, Cash Financial Services, KGI Securities, Prudential Securities and Sun Hung Kai Securities said they received a total of HK$3.4 billion in orders, more than enough to cover the retail portion, which should be worth about HK$3.178 billion. And that's before what will be much larger orders through bigger banks and brokers.

The only question now is how many times the shares on offer will be covered. Of the 26.486 billion H shares for sale, 1.324 billion, or 5 percent, have been initially slated for local retail investors. But if the retail portion is 100 times subscribed or more, it will be raised to 20 percent under the so-called clawback mechanism.

One-week interbank rates, the most common benchmark for IPO lending, surged to nearly 4.1 percent on Friday from 3.9 percent the day before.

Most brokers' margin financing rates fall between 4 and 6 percent, while HSBC and Hang Seng Bank are advertising a rate of about 5 percent.

Fubon Bank is the most aggressive lender, offering an effective rate of about 1.6 percent, though new clients have to deposit at least HK$110,000 of their loans with the bank to qualify.

CCB, which is seeking to raise up to HK$73.1 billion from its global offering, lifted its IPO price range to HK$1.90 to HK$2.40 from HK$1.80 to HK$2.25 to reflect overseas institutional investors' warm reaction to the IPO. It also cut the lot size to 1,000 shares from 2,000 to be able to satisfy as many retail investors as possible. Phillip Securities senior research analyst Stephen Tse said, "The response would be stronger if the price range had not been revised and if the lot size had been left unchanged at 2,000 shares."

Kingston Lin, an associate director at Prudential Securities, said, "We estimate that CCB's shares have to go up at least 5 percent to allow margin borrowers to break even. The higher IPO price may trim the upside potential since it makes CCB's price-to-book value about two times, which is even more more expensive than a blue-chip bank like HSBC Holdings."