The heavily hyped public share offering of China Railway Construction failed to meet debut expectations yesterday, but it still overcame one of the worst trading days of the year to rise 12 percent.

Before lowering their expectations this week, many analysts had expected the initial public offering (IPO) to soar by at least 20 to 30 percent on its opening day.

But no one foresaw it having to contend with the overall market plunging 4.8 percent.

China Railway Construction shares rose as much as 18.3 percent in the morning, but they ended up closing at HK$12, or 12 percent above its IPO price of HK$10.70. The dual-listed IPO raised more than HK$18.2 billion in Hong Kong and 22.2 billion yuan in Shanghai.

The IPO was the world's largest this year. It was also the most popular ever among Hong Kong's retail investors, despite the recent market woes that have seen many IPO listings delayed. All in all, China Railway Construction attracted 293 times subscription in the retail tranche, freezing a record of HK$534.2 billion.

The lackluster IPO market is due to the stock market seeing a number of huge ups and downs this year. Investors have lowered their expectations of debut performances compared with last year, when share prices were more apt to surge. Internet firm Alibaba, for example, saw a 200 percent rise in its share price on its late-2007 debut.

The unspecactular debut of China Railway Construction could curb interest in other upcoming share issuings, such as Guangdong-based real estate developer Evergrande, snack-food maker Want Want and printing firm Wing Fat Printing.

China Railway Construction has attracted investors who see it as a heavy beneficiary of the mainland's booming transport industry.

Chairman Li Guorui, during the listing ceremony, said that the mainland's macro-tightening policy won't have a great impact on the company, and he believes China Railway Construction will continue to develop on par with the mainland's railway infrastructure development. He said the company is satisfied with the share performance on its debut.

China Railway Construction's Shanghai shares rose a disappointing 28 percent in their Monday debut. The IPO price there had been 9.08 yuan.

"There is no question about the company's fundamentals, but it will have selling pressures in the short term," said a dealer in Hong Kong. "Investors may buy a small amount, but they should expect to hold onto the stock for more than six months in order to take profits."

(HK Edition 03/14/2008 page3)