SHANGHAI (Dow Jones)--Locomotive maker China CNR Corp. made a weaker-than-expected debut in Shanghai on Tuesday, building on a trend of new main-board listings performing feebly on their first day of trading in the last two months because of high valuations and increased supply.
At the midday break on the Shanghai Stock Exchange, CNR was up 3.1% at CNY5.73 from its initial public offering price of CNY5.56, while the Shanghai Composite Index was down 0.5% at 3174.51.
CNR opened at CNY5.80, up 4.3% from its IPO price, well below expectations of a 16.5% rise, according to the average forecast of four analysts surveyed earlier by Dow Jones Newswires.
"Investors' interest in IPOs will remain subdued as long as they can't secure a juicy profit when the stocks are listed," said Li Nian, an analyst at Shenyin Wanguo Securities.
CNR raised CNY13.9 billion (US$2.04 billion) in its IPO last week after pricing 2.5 billion yuan-denominated A shares, or 30% of its enlarged capital, at the top end of the indicative range.
The IPO price represented 49.21 times 2008 earnings. CNR's major rival, China South Locomotive & Rolling Stock Corp., is now trading around 40 times 2008 earnings.
The final offering size, widely considered a reduction from an original level of 3 billion shares, came after a decline on the local stock market because of concerns about the effect on market liquidity of a quickening pace of IPOs.
China's securities regulator approved 50 companies to conduct IPOs in December, the fastest pace since China ended a nine-month moratorium on IPOs in June, raising supply in hopes of cooling the market.
Despite dropping 8.7% from its year-to-date peak on Aug. 4, the Shanghai Composite Index is still up 74% since the start of the year.
CNR's debut was even weaker than those of two other recent large Shanghai listings, China Shipbuilding Industry Co. and China Merchants Securities Co.
China Shipbuilding Industry opened 14% higher than its IPO price on Dec. 16, while China Merchants Securities gained 13% on its IPO price on its debut Nov. 17.
Both China Shipbuilding Industry and China Merchants Securities have since drifted below their respective IPO levels.
