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SCMP Reporter

SHARES of China's Harbin Power Equipment Co (HPEC) lost 3.1 per cent in their debut trading session yesterday.

  'The fall was expected as market sentiment had been worsening since the share offering,' said Yamaichi International (HK) research director Alex Tang.

  Despite a rise in the opening minutes, shares of the mainland's largest power generation equipment maker were locked between $2.40 and $2.50 for the rest of the day.

  The stock ended at $2.50, down eight cents from the issue price of $2.58, with more than 41 million shares changing hands.

  Mr Tang said the decline was moderate compared with the magnitude of the Hang Seng Index crash in the past two weeks, when the company fixed its issue price.

  He said the current price level was attractive, in view of the company's strong profit growth potential, with its expertise in making 600-megawatt thermal power generators and a full order book until 1997.

    He estimated the company's earnings to grow as fast as 40 per cent next year.

    The plunging stock market has taken its toll on new listings. Chengdu Telecommunications Cable lost more than 13 per cent on Tuesday on its debut.

    Despite connections with the China National Nonferrous Metals Industry Corp, Oriental Metals plunged almost 25 per cent on Thursday in maiden trading.

  HPEC chairman Li Genshen yesterday dismissed allegations that the company's pricing was aggressive, and said that it was reasonable at the time it was decided.

     Because the company's international placement was almost 12 times subscribed, the response illustrated investors' confidence in the stock, he said.

  Rodney Ward, managing director of S G Warburg's Far East Region division, HPEC's sponsor, said investors were more focused on the fundamentals of Chinese companies, representing a healthy development for H-share listings.

  'You are getting proper analysis and investigation of the companies,' he said, which helped reduce the likelihood of a downside for investors.

  Last year, the H-share market was flooded with investors who wanted to make short-term gains.

   However, with the growing reality of China's economic woes and an increase in mainland listing candidates, investors are more selective.

  Mr Ward said there would be some volatility for H shares because of China's political and economic situation, but said the recent downfall appeared to be exaggerated.

   However, compared with Chinese stocks listed in New York, or N shares, he said H shares would fare better because they had a natural secondary market in Hong Kong.



Harbin Power loses steam