China Southern Locomotive, the country's biggest train manufacturer, saw its shares peak in their Monday trading debut at 83 percent above the initial public offering price and then fall back as the broader market extended its losses.
The state-run company's shares closed at 3.45 yuan, down from the high of 4 yuan reached early in the day. The shares closed 10.6 percent lower than their opening price of 3.86 yuan but still about 58 percent above the IPO value.
China Southern Locomotive priced its IPO of 3 billion yuan-denominated shares at 2.18 yuan ($0.31-$0.32).
The debut did little to brighten sentiment on a market that has lost 55 percent of its value since the beginning of the year. The benchmark Shanghai Composite Index slid 5.3 percent to 2,319.87 in a broad decline led by refiners and other large capitalized shares.
"It's not the best time to be putting IPOs on the market these days," said Zhang Jincan, an analyst who focuses on the machinery industry, at Guotai Junan securities in Beijing.
But given the strong growth planned for China's railways in the coming years, the share's price is in a "rational range," he said, noting that efforts to curb inflation by keeping tight controls on construction investment were unlikely to adversely affect its business.
By the end of last year, China had spent less than a third of the 1.25 trillion yuan (US$187 billion) it had budgeted for railway expansion for 2006-2010, according to Jing Ulrich, chairwoman of China equities for JPMorgan Chase & Co.
Together with a tandem listing on the Hong Kong Stock Exchange later this month, China Southern Locomotive's IPO raised about US$1.5 billion _ a far cry from the mega-listings of last year.
According to research firm Dealogic, this year Chinese markets, including Hong Kong's, have seen new share listings plummet to a total US$22 billion raised in 109 issues so far, down from US$45.1 billion worth of listings in the same period of 2007.
Meanwhile, share prices in both Shanghai and the smaller market in Shenzhen have languished _ dogged by pessimism over the economy and earnings prospects for companies likely to see sales fall as demand for products declines in the U.S. and other countries battling recession.
The pace of IPOs in China's markets has slowed to a trickle. The China Southern Locomotive listing is the first in months and despite its relatively modest size the third largest this year.
The 6.54 billion yuan (US$952 million) raised in the Shanghai segment of China Southern Locomotive is about 10 percent of the 66.8 billion yuan (US$8.9 billion at the time) oil and gas conglomerate PetroChina netted in its Shanghai IPO last October _ a record for a mainland exchange.
The two larger mainland IPOs so far this year, those of China Railway Construction Corp. and China Coal Energy Co., raised US$5.7 billion _ the second biggest worldwide so far this year _ and US$3.5 billion, respectively.
Mainland China's markets were set up to raise money for state companies, and for the most part they still do. But the protracted correction is causing some major players to defer domestic IPOs _ among them China Mobile, which late last year had been expected to raise as much as US$10 billion in a Shanghai share listing.
In June, Ping An Insurance, China's second-largest insurer, postponed for at least six months a plan to issue new yuan-denominated shares to finance acquisitions, citing market conditions.
Overall, the average ratio of share prices to earnings on mainland markets has fallen from between 50 percent to 60 percent to below 20 percent, a reasonable level, most analysts say.
But midway through the Olympics, with no sign of a rally or rebound in sight, investors used to seeing the government intervene to help prop up the market are still looking for a rescue, said Zhai Peng, a strategist at Guotai Junan securities in Shanghai.
Online comments seen Monday summarizing a weekend discussion between government regulators and reporters for state-run media suggested the authorities "would not take any move to save the poor market," Zhai said. "This is far below investors' expectations."
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AP Business Writer Jeremiah Marquez contributed to this report.
