Everbright Securities, the first brokerage to launch an A-share initial public offering in seven years, gained 29.98 per cent on its trading debut yesterday, a sign that liquidity is starting to dry up.
Shares of the Beijing-based brokerage closed at 27.40 yuan, up 6.32 yuan from the flotation price of 21.08 yuan after soaring as much as 46.5 per cent to 30.88 yuan in the morning on the Shanghai Stock Exchange.
The first-day gain was the smallest for a newly listed stock since Beijing lifted a nine-month suspension on new share offers in June.
Analysts had expected the brokerage to be mobbed by investors on its first trading day since it was more than 100 times oversubscribed early this month.
However, the recent market pullback has taken the edge off speculators' appetite for flotation stocks.
'Investors have begun to question the profitability of brokerages because the correction might eat into their 2009 earnings,' said TX Investment Consulting analyst Yao Yinan. 'After all, brokerage fees and income from proprietary trading, the major cash cows for Chinese securities firms, are set to decline amid the market downturn.'
The Shanghai Composite Index has shed 16.1 per cent since surging to this year's high of 3,471.44 points on August 4 as liquidity worries undermine confidence.
