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SHANGHAI - Shares in China Railway Group, the world's third-largest construction contractor, rose 69 per cent on their Shanghai debut yesterday, calming fears that big Chinese listings could be running out of steam.
Buoyed by its near monopoly of China's fast-growing railway construction sector, China Railway raised US$3 billion ($3.9 billion) in its Shanghai initial public offer, mainland China's eighth-biggest. It raised a further US$2.5 billion from an IPO in Hong Kong, where it debuts on Friday.
Analysts had warned a lacklustre debut could dent confidence in Shanghai and Hong Kong, where markets have seen steep falls in recent weeks, but many saw China Railway's debut as reasonable and a potentially stabilising influence.
"China Railway's closing price inclined slightly to the high end but was more reasonable than many previous debutants, whose first-day prices hit 30 or even 50 per cent higher than analysts had expected," said analyst Zhou Lin at Huaxia Securities.
The local-currency A shares closed at 8.09 yuan ($1.41), compared with an IPO price of 4.8 yuan, valuing China Railway at nearly US$23 billion. Analysts had predicted opening day gains between 50 and 80 per cent.
Retail investors who grabbed shares during China Railway's IPO appeared to be happy with the pricing. The offering saw a record US$457 billion in subscriptions.
While the Shanghai market has tumbled amid worries about inflation-cooling measures, slower corporate earnings growth and the influx of new shares, investors have sought the relative safety of share offers by state-owned firms, which tend to be priced conservatively.
Analysts expect Shanghai's next big IPO, by China Shipping Container Lines, to raise up to US$2 billion upon launch this week.
China Railway's Hong Kong offering has attracted nine cornerstone investors including China Investment Corp, China Life Insurance's parent and Henderson Land chairman Lee Shau Kee.
- Reuters
