Shanghai's first IPO in 11 months soars on debut

[July 27, 2009]  BEIJING (AP) -- The first company to list on China's main stock exchange in 11 months soared more than 300 percent in its trading debut Monday, reflecting renewed market activity following a sharp decline last year.

Sichuan Expressway Co. surged 323.6 percent to 15.25 yuan ($2.22) per share on the Shanghai Stock Exchange before falling back to end the day at 10.90 yuan ($1.59) -- still a 203 percent gain over the price that shares were sold for in its initial public offering. The rapid run-up in price triggered two temporary trading suspensions during the day.

The company was the first to start trading in Shanghai since regulators ended a ban on IPOs in June. Several other companies with IPOs have begun trading since then on China's smaller second exchange in the southern city of Shenzhen.

"I'm speechless. Even the most optimistic investors wouldn't have expected such a high price," said Cao Xuefeng, an analyst for Huaxi Securities in the western city of Chengdu.

China imposed a moratorium on IPOs in September amid falling prices and worries that a glut of new shares might drag markets lower.

Chinese stocks usually are limited to a 10 percent daily fluctuation in price, but that cap does not apply to the first trading day.

The Shanghai Composite Index, the country's market benchmark, has risen more than 80 percent this year.

Sichuan Expressway Co., based in Sichuan's capital Chengdu, has benefited from economic stimulus spending and a rebound in the local economy following a massive earthquake on May 12, 2008, that killed nearly 90,000 people.

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On the Net:

Shanghai Stock Exchange (in Chinese): http://www.sse.com.cn/

[Associated Press]

Associated Press researcher Bonnie Cao in Beijing contributed to this report.

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