Interest in upcoming initial public offerings may be dampened after Metallurgical Corp of China (MCC) fell below its offer price on its first day of trading yesterday, analysts said. State-owned MCC, which builds industrial plants, makes machinery and digs mines, raised a total of US$5.12 billion in Shanghai and Hong Kong, and was oversubscribed. But the stock closed at HK$5.61 yesterday, down 11.7 per cent from its offer price of HK$6.35. MCC's mainland shares, which began trading on Monday, fell for the third day, sliding 13.4 per cent. It was unclear whether the drop was due to a steep fall in Hong Kong stocks or the relationship between the prices of A and H shares. 'It's very disappointing for subscribers who thought MCC was the among the most attractive ones,' said Andrew To, a sales director at Taifook Securities. 'Institutional investors might still stay put, but individuals might choose to sell their holdings if they are using margin financing.' Delta Securities analyst Conita Hung said even though MCC was not as attractive to retail investors as another state-owned offering, pharmaceutical distributor Sinopharm Group, the price fall was unexpected. 'The share price went down more than expected,' she said. 'I don't expect it will go back up to the offer price level any time soon.' Popular offerings such as MCC and Sinopharm have been priced towards the top of the price range. While MCC shares were valued at about 10 times earnings, Sinopharm shares were at 30 times. To and Hung said investors would be cautious of the new batch of offerings coming to the market next week. The market was weak yesterday, with the Hang Seng Index shedding 544.79 points. Increasingly, analysts are also asking why dual-listed firms like MCC are not traded on the same date. With the perception that mainland listings will be valued at a premium to local prices, Hong Kong-listed shares are likely to trade up on expectations of a mainland listing, RBS ABN Amro head of China Research Wendy Liu said. The short-term surge in prices caused by dual listing is likely to intensify if the mainland opens to Hong Kong-traded companies. 'In most cases, if a firm announces a secondary offering in the local market, its locally traded shares will take a hit,' she said. 'So this unique pattern may create some difficulty in coming to a reasonable offering price to mainland investors. 'That said, we believe the Chinese securities regulators are more aware of this pricing pattern now and the subsequent retail backlash if there is too much mispricing.' Liu suggested providing pricing guidance based on average trading prices over a long period might help ease the impact of possible short-term price rises. 'In China, there are a lot of rumours that major investors are getting burnt on these shares,' said Ricky Tam Siu-hing, a director at Champlus Asset Management. He said MCC's weak debut lowered the bar on expectations for new H-share issues and could cool the offering pipeline near term. Another new offering, China Lilang, which is due to be traded on the stock exchange today, was being priced yesterday at HK$3.80 per share in the grey market, a 2.56 per cent discount to its offer price of HK$3.90, Philip Securities said. Lilang's highest and lowest trading prices on the broker's automated electronic platform for pre-flotation shares were HK$3.86 and HK$3.51. The Hang Seng Index fell 2.5 per cent to 21,050.73 points yesterday, the most in more than a month.