China State Construction Engineering Corp, which built the 'Water Cube' swimming centre for the Beijing Olympics, was up 60 per cent from its IPO price by mid-morning on the Shanghai Stock Exchange. CHINA State Construction Engineering Group shares soared at their Shanghai debut as investors jumped at the world's largest stock offering in 16 months.
However, the stock's sharp rise contrasted with the overall market, which finished the day five percent lower as dealers moved to lock in profits from several weeks of strong rallies.
The share price was above a 'fair value' of about five yuan, which he said would more adequately reflect the company's actual earning potential. China ended a nine-month moratorium on IPOs in June, but it remains wary about overly dramatic price fluctuations on the first day of trading in new stocks.
While allowing new IPOs, the securities regulator has issued rules aimed at reining in large surges in their price, including a ban on investors using multiple accounts.
Banking regulators have also tightened lending rules in an attempt to prevent bank loans, extended as part of China's economic stimulus measures, from being used to speculate on the stock market.
While share prices are allowed only to fluctuate within a daily 10-per cent trading band, there are generally no limits on how much they can move on the first day of trading in China.
The underlying logic is that Chinese shares usually rise steeply on their debut, and it is considered better to let investor enthusiasm play itself out within just one session. The alternative would be that newly listed Chinese shares close limit-up for several sessions after their initial debut.
China's securities regulators halted IPOs in September 2008 amid worries that pressure on liquidity would worsen the already ailing domestic markets but reinstated them.
It appears given the market conditions at the moment, China will probably go on approving further large IPOs soon.
However, the stock's sharp rise contrasted with the overall market, which finished the day five percent lower as dealers moved to lock in profits from several weeks of strong rallies.
The share price was above a 'fair value' of about five yuan, which he said would more adequately reflect the company's actual earning potential. China ended a nine-month moratorium on IPOs in June, but it remains wary about overly dramatic price fluctuations on the first day of trading in new stocks.
While allowing new IPOs, the securities regulator has issued rules aimed at reining in large surges in their price, including a ban on investors using multiple accounts.
Banking regulators have also tightened lending rules in an attempt to prevent bank loans, extended as part of China's economic stimulus measures, from being used to speculate on the stock market.
While share prices are allowed only to fluctuate within a daily 10-per cent trading band, there are generally no limits on how much they can move on the first day of trading in China.
The underlying logic is that Chinese shares usually rise steeply on their debut, and it is considered better to let investor enthusiasm play itself out within just one session. The alternative would be that newly listed Chinese shares close limit-up for several sessions after their initial debut.
China's securities regulators halted IPOs in September 2008 amid worries that pressure on liquidity would worsen the already ailing domestic markets but reinstated them.
It appears given the market conditions at the moment, China will probably go on approving further large IPOs soon.
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