DEMAND from US institutions helped make Shanghai Petrochemical the most heavily traded stock yesterday on its debut in Hongkong, when it closed at a three-cent premium to the issue price. Shares in the petrochemical giant, the first heavy-industrial stock traded in Hongkong, closed yesterday at $1.61, compared with the $1.58 paid by Hongkong investors. Merrill Lynch Asia Pacific chairman Peter Clarke said: ''We are pleased with the day's performance. We saw local retail selling and continued demand from United States institutions.'' But Petrochemical's debut performance contrasted with that of Tsingtao Brewery, the first mainland-based enterprise to list in Hongkong, and other Beijing-backed red chips, whose shares have generally risen well above the issue price in their first day of trade. ''If it had not been for the little rebound in the stock market, its price might have fallen below the issue price,'' one broker said. The lukewarm reception for Shanghai Petrochemical was not unexpected. Brokers said the issue price of $1.58 indicated that investors' response to the issue had been less than overwhelming, given that a range of $1.55 to $1.74 a share had been set. The final price was an indication of the level of interest in the stock in the United States and elsewhere. Mr Clarke said the price, set in New York last Friday, reflected the recent bad news about China's economy and the weakness of the Hongkong market. About 103 million Shanghai Petrochemical shares, worth $166 million, changed hands yesterday. Shanghai Petrochemical shares opened at $1.64. In the first half hour they climbed to a high of $1.69, then touched a low of $1.59. After that burst of excitement, the price stabilised, and the shares traded at between $1.60 and $1.62 for the rest of the day. A huge number of VIPs, including Liu Hongru, the head of China's Securities Regulatory Commission, and reporters attended the launch ceremony for the stock at the exchange. The company was given the stock code of 338, an auspicious number which in Chinese carries the connotation of vitality and prosperity. The company sold 1.68 billion shares, including 840 million H shares in Hongkong. The 8.4 million American depositary receipts, representing 100 shares each, were sold at US$20.39 each. Shanghai Petrochemical general manager Wang Jiming said the company had been the subject of enthusiastic attention and intense discussion since the launch of its global offering on July 6. ''Facts speak louder than words. For many years the company has been the focus of people's attentions because of its operating achievements, strong potential for development . . . efficient management and high growth rates,'' he said. He said he expected the Hongkong listing to help investors reach a better understanding of the company.