Shares of Poly Real Estate Group, the largest state-owned property developer, surged 45 per cent on its first day of trading yesterday in Shanghai, defying a slump in the broader market.
Poly Real Estate, the first property developer to list on the mainland stock market after a year-long ban on new listings, closed at 20.20 yuan, a sharp rise from the initial public offering price of 14 yuan per share.
'The decline in the broader market curbed the stock's performance, which should have been more than 50 per cent,' said Bridge Wu, a manager at the Equity Capital Markets unit of Changjiang BNP Peregrine Securities.
'Also, as the price had risen to more than 10 yuan, it had become too expensive and might have prompted many individual investors to sell on the first day.'
The Shanghai Composite Index fell 3 per cent to 1,612.7 points yesterday as investors feared the market would be dampened by upcoming major initial public offerings that would absorb liquidity. These listing candidates are Air China, Guangshen Railway and Industrial and Commercial Bank of China.
Most new listings in the domestic markets gained in their debuts, including Bank of China, since the ban ended last month because investors were hungry for new stocks.
The retail tranche of Poly Real Estate's offering, which made up 80 per cent of total float, was 83 times oversubscribed, while 20 per cent allocated for institutional investors were 110 times oversubscribed.
