HONG KONG (AFP) - Shares of the Industrial and Commercial Bank of China (ICBC) have posted modest gains two weeks after investors scrambled to get in on the world's largest ever initial public offering.

Shares of the Industrial and Commercial Bank of China (ICBC) have posted modest gains two weeks after investors scrambled to get in on the world's largest ever initial public offering. [AFP]

The dual listing of the bank's shares in Hong Kong and Shanghai, the first of its kind for China, sparked frenzy as top rank foreign and domestic investors sought to get a piece of the Chinese growth miracle.

The demand was so intense that the lender, China's largest, decided to exercised its over-allotment option this week, increasing the number of shares on offer to raise a world record-breaking 21.1 billion dollars.

While the state-owned ICBC staged a strong debut in Hong Kong last month with Shanghai lagging behind, two weeks on, its shares have only managed to score modest gains, analysts said.

They have risen 19 percent from their offer price in Hong Kong and 12 percent higher than the issue price in Shanghai with many individual investors having taken profit, they said.

Although fresh fund inflows are flooding the Chinese and Hong Kong stock markets, pushing them to record highs as investors bet on a further strengthening of the Chinese yuan, the money has also gone to other China-related stocks.

"I am a little disappointed with its performance," said Francis Lun, general manager of Fulbright Securities. "It's a big bank. I expected it would perform better."

In Shanghai however, Gu Junlei, banking analyst with Orient Securities, said ICBC's performance matches its expectations: "It offered a lower initial public offering price, which paved the way for further steady increase."

Kitty Chan, director of Hong Kong-based Celestial Asia Securities Holdings, said its performance was "acceptable" and remained within her expectations given the many problems that have dogged the sector.

International investors have jumped at the chance to buy into a piece of the Chinese financial sector despite mountains of bad debt, poor management and a lack of transparency.

But Chan said: "Investors will continue to be attracted by a country that has good economic growth and that will go for its banks."

While many investors believe ICBC, with 800 billion dollars in assets, would be too big to fail, analysts said foreign investors may turn their focus on smaller and non state-owned banks believing they have greater potential because they could offer more flexibility on strategic direction.

ICBC is the third of China's big four banks to go offshore after Bank of China and China Construction Bank as part of government-driven sector reform.

However, the three-listed banks still have major government shareholding, which is open to potential conflicts about the direction they should have.

"When the banking sector is more opened up, the focus will be more on the smaller banks like the Bank of Communications and China Merchants Bank because they can be more flexible," said Jackson Wong, investment manager at Tanrich Securities.