CHINESE investors’ enthusiasm for new listings remained intact, indicated by the strong debut yesterday for manufacturer Anhui Yingliu Electromechanical Co., the 10th listing since the moratorium on initial public offerings (IPOs) was lifted.

    The jump in the shares of steel casting manufacturer Anhui Yingliu on its first day of trade followed gains of between 19 percent and 46 percent for the nine other companies that have had debuts since Chinese industrial valve manufacturer Neway Valve (Suzhou) Co. kicked off the country’s new listings Friday with a 34.06 percent rise in on debut.

    China reopened the country’s IPO market after an overhaul of the IPO system aimed at reducing the government’s control over markets. China is steering its IPO system in a direction that will make it more similar to those in developed economies, in which the government determines whether companies meet disclosure requirements, leaving the market to determine share prices.

    The Shanghai-listed shares of Anhui Yingliu closed at 11.10 yuan (US$1.83), up 34.06 percent from its IPO price of 8.28 yuan, though off its earlier high of 11.92 yuan.

    Anhui Yingliu’s shares may follow a typical pattern — a pop in the first day of trading followed by a retreat, Central China Securities analyst Zhang Gang said. “The scarcity of new listings leads to the jump on first-day trading of new issues,” Zhang said.

    The shares opened up with the maximum rise permitted — 20 percent — at 9.94 yuan and then rose another 10 percent, triggering a 30-minute trading halt.

    The Shanghai bourse has three lines of defense against first-day frenzy. First, the opening price for a new listing is capped at 20 percent above the IPO price. A rise of more than 10 percent from that opening level results in a half-hour cooling-off period. A rise of 20 percent or more from that opening level stops trading until a few minutes before the market closes for the day. (SD-Agencies)