CHINA Tobacco International (HK) Co. had another wild day in Hong Kong yesterday.

A morning surge took its three-week rally to nearly 500 percent, and then it swung between gains and losses in the afternoon.

The international unit of China National Tobacco Corp. (commonly known as China Tobacco), the biggest maker of cigarettes in the world, surged as much as 44 percent yesterday morning, putting it up 484 percent from a June 12 initial public offering price of HK$4.88 (63 U.S. cents).

Even with the pullback, the company is easily the best-performing initial public offering in Hong Kong this year.

“The price surge is ridiculous and it just indicates the crazy and irrational investment behavior,” said Dickie Wong, executive director of research at Kingston Securities Ltd.

“The current valuation is far higher than what it deserves. It’s understandable that investors bet on Chinese consumers’ love of tobacco and liquor, but we should still keep a clear mind.”

China Tobacco’s run since its debut in Hong Kong has included a surge of 41 percent June 13 and a 52 percent rally this Tuesday.

Investors have been drawn in because of the scarcity of listed assets in China’s cigarette market, which remains enormous despite a gradual decline in the number of smokers.

“In that sense, it is very similar to Moutai,” said Lu Changshun, a fund manager at Beijing Dajun Zhimeng Investment Management Co., referring to liquor maker Kweichow Moutai Co. and the strong market position it holds on the mainland, where it is one of the most widely held stocks.

(SD-Agencies)