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UPDATE 1-China's CSCEC shares spike in Shanghai debut

Published 07/28/2009, 10:02 PM
Updated 07/28/2009, 10:08 PM

* CSCEC's $7.3 billion IPO largest in world this year

* Debut price again betrays signs of rampant speculation

* Powerful debut raises concerns about asset price bubbles

* Strong positive sign for other upcoming major IPOs (Adds details, analyst quote)

By Lu Jianxin and Edmund Klamann

SHANGHAI, July 29 (Reuters) - Shares in China State Construction Engineering Corp, whose $7.3 billion initial public offering last week was the world's largest in a year, jumped beyond analysts' expectations in their market debut, boding well for upcoming IPOs but stirring concern about asset price bubbles.

It was the second blockbuster listing in Shanghai after China ended a 10-month IPO suspension last month, following on the heels of Sichuan Expressway's runaway success on Monday.

"Such strong debuts of new listings will become a great boost for forthcoming IPOs, though worries have also strengthened of overall high valuations of the market," said Qian Qimin, deputy head of research at Shenyin & Wanguo Securities in Shanghai.

Local-currency A shares in CSCEC, China's biggest homebuilder, kicked off trading on the Shanghai Stock Exchange at 6.70 yuan, up 60 percent from their IPO price of 4.18 yuan, and reached an intraday high of 7.96 yuan within 15 minutes of trade, up 90 percent.

The prices were much stronger than market expectations. A Reuters survey of eight industry and stock analysts predicted the firm's A shares would trade near 6.0 yuan on the debut day, up 44 percent from their IPO price. The highest forecast was 8.0 yuan.

The strong debuts by CSCEC and Sichuan Expressway bode well for a series of listings lining up on the mainland since the IPO ban was lifted last month, including Everbright Securities, which this week began book-building for a $1.5 billion IPO next week, only the country's second IPO by a securities brokerage.

Other big names include the country's top tourist agency, China International Travel Service Corp, and its biggest ship builder, China Shipbuilding Industry Co, whose IPOs were approved by the China Securities Regulatory Commission over the past two weeks and are likely to be launched next month.

CSCEC raised 50.2 billion yuan ($7.34 billion) by selling 12 billion A shares, or 40 percent of its expanded capital, to become China's fourth-biggest IPO ever.

China International Capital Corp underwrote the IPO. ($1=6.83 Yuan) (Editing by Valerie Lee)

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