'Tomorrow everyone is expecting a strong debut for Shanghai Posts and Telecommunications, which looks likely to be one of the best issues of the year,' said Newman Mou, trader at Smith New Court in Hong Kong.

Mr Mou said the grey market price, the value existing shareholders agree in advance to sell their shares, was already 65 cents, compared to the issue price of 39.6 cents.

China plans to triple its telephone capacity to 140 million phone lines by the end of the century, and Shanghai Posts is well-placed to take part in this expansion with two joint ventures with United States telecoms giant AT&T.

Mr Vibert said Shanghai Post's considerable business with poorer inland regions could affect its profitability, and another threat was the influx of foreign telecommunications companies should China join GATT (the General Agreement on Tariffs and Trade).

Market analysts said the boost Shanghai shares may get out of the new listing would be tempered by concern over China's overheated economy as a whole.

Shanghai A shares have tumbled more than 30 per cent since peaking in early September because of the reported failing health of senior leader Deng Xiaoping and waning confidence over the government's resolve to revive the stock market.

Another factor in yesterday's rise was the heavy buying of Xiamen Motor's A shares, which prompted speculation that a takeover bid was being prepared, traders said.