* CSCEC up 70 pct in Shanghai debut after $7.3 billion IPO
* BBMG up 60 pct at HK$10.20 vs HK$6.38 IPO price
* Strong CSCEC debut renews concerns about market bubble
* Positive signs for other forthcoming major IPOs
By Lu Jianxin and Alison Leung
SHANGHAI/HONG KONG, July 29 (Reuters) - China State Construction Engineering Corp surged 70 percent in its Shanghai debut on Wednesday, while building materials group BBMG Corp enjoyed the strongest listing in Hong Kong this year as ample investor funds chased exposure to Beijing's infrastructure stimulus spending.
The stronger-than-expected debut for CSCEC, whose $7.3 billion IPO last week was the world's largest in a year, showed China's improving economy and booming markets are drawing investors, but will heighten concerns about a speculative stock market bubble forming, and Beijing's responses.
"Such strong debuts of new listings will be a great boost for forthcoming IPOs, although worries have also heightened about high valuations overall in the market," said Qian Qimin, deputy head of research at Shenyin & Wanguo Securities in Shanghai.
Beijing reopened the pipeline for IPOs last month after a powerful rally in the Shanghai Composite Index, fuelled by a surge in lending from state-linked banks aimed at helping the economy recover. The index is up about 90 percent in 2009.
Beijing has also committed to spending around $585 billion in stimulus measures, much of it focused around building and infrastructure, increasing interest in the sector.
The listing for CSCEC, China's biggest homebuilder, follows Monday's spectacular Shanghai debut of Sichuan Expressway, which tripled on its first day's trading. It creates an index heavyweight that is the Shanghai market's biggest construction and property stock.
The debuts bode well for a series of listings lining up on the mainland since China lifted an unannounced 10-month IPO ban last month, including Everbright Securities, which this week began book-building for a $1.5 billion IPO next week.
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.
BBMG SURGES
In Hong Kong, Beijing-based BBMG, a manufacturer of building materials and rose as much as 65 percent to HK$10.50 in its trading debut, the best debut by a Hon Kong listing this year.
Hefty liquidity in the Hong Kong market has also been drawn to IPO shares, but some analysts expressed concern over stretched valuations.
"This company is just a Beijing-play, not a national one, so a 20 to 21 times P/E valuation looks quite pricey. But it's a demand and supply thing; in the short term there aren't enough new shares coming in, so it may still find takers at this valuation," said Peter Pak, vice-president with BOCI Research in Hong Kong.
Similar valuation concerns were raised in Shanghai.
"We're glad to see the listing of a 'triple giant' as China's fledging market still needs more large-cap blue chips to bolster healthy development," said construction industry analyst Luo Guo at Orient Securities.
"But the market is also clearly worried about excessive speculation as CSCEC's debut pricing is apparently over-valued."
Local-currency A shares in CSCEC kicked off trading on the Shanghai Stock Exchange at 6.70 yuan, up 60 percent from their IPO price of 4.18 yuan.
They reached an intraday high of 7.96 yuan within 15 minutes of trade, up 90 percent, but mainly traded around 7.0 yuan, topping consensus expectations for a debut day around 6.0 yuan.
"TRIPLE GIANT"
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, while its listing gives the market a leader for the property and construction sectors, as well as the index overall.
The 6.7-yuan opening price gave CSCEC a market capitalisation of $29 billion, making it the mainland market's 14th biggest stock with a 1.06 percent weight in the benchmark index.
CSCEC's market cap far exceeds the $20 billion of the previous construction and engineering sector leader, China Railway Construction, and $23 billion for the country's top listed property developer, China Vanke.
The opening price valued CSCEC at 42 times its forecast 2009 earnings per share of 0.16 yuan, well above the average 26 times for 15 listed Chinese construction and engineering companies, according to Reuters Estimates.
CSCEC Chairman Sun Wenjie told reporters in Shanghai on Wednesday the company's sales would reach 300 billion yuan next year, but it has no plans to list in Hong Kong or other markets outside China for now. [ID:nNBJD000996]
China International Capital Corp underwrote CSCEC's IPO. (Additional reporting by Samuel Shen in Shanghai; Editing by Lincoln Feast) ($1=6.83 Yuan)