Kerry Properties made a less than spectacular debut on the stock exchange yesterday, underperforming an otherwise bullish market. The property arm of Kuok Group reached a high of $17.70 on its first day of trading but fell back to close at $17.55, a rise of five cents, or 0.28 per cent, from the $17.50 issue price. This compared with a 0.96 per cent increase registered by the Hang Seng property sub-index yesterday and a 1 per cent gain by the Hang Seng Index. Kerry Properties reported a relatively low trading volume of about 8.08 million shares and a turnover of $141.86 million. Ambrose Chang, chief investment officer of Daiwa International Capital Management, said: 'Investors were quite cautious about the company's outlook in the light of the low oversubscription rate.' Mr Chang said investment sentiment in the company was partly hurt by the management's move to cut the issue price during the public offering. Due to weak market conditions, Kerry Properties late last month cut the issue price to between $17.50 and $18 per share, from an earlier range of $19.50-$21.50. However, the move failed to boost substantially the response of the initial public offering, which was just 1.03 times subscribed. Mr Chang said the unexciting share performance was partly due to the uncertainty about whether interest rates would rise. Any rise in interest rates is expected to dampen an already shaky recovery in property prices. Some analysts said investors should take a longer-term view on the stock. Michael Green, director of Salomon Brothers' Asia Pacific equity division, said he was optimistic about Kerry Properties' long-term prospects in view of its high quality assets. Analysts did not expect to see a drastic fall in the company's shares. The liquidity of the stock was low, because the bulk of shares were controlled by Kuok Group, they said. After the float, Kuok Group will retain about 75.8 per cent of its property arm while the public, including independent third parties, will hold 24.2 per cent. Kerry Properties on Sunday announced that independent third parties had increased their stake in the company from 9.2 per cent to 12.3 per cent. The company's chief financial officer, Chew Fook Aun, declined to identify the third parties but said they included institutional investors and corporations that had business relationships with the company.