China Coal gains but Shanghai debut worst in months

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China, the world's largest coal producer and consumer, is struggling to meet growing demand for the fuel which generates 80 percent of its energy. Power shortages are currently affecting much of the country during harsh winter conditions, highlighting the need for more coal.

But interest in China Coal's stock was dented by a down-beat note from Goldman Sachs and a 1.4 percent fall in China's main stock index .SSEC on Friday, which followed its second-biggest monthly drop in more than a decade in January.

"China Coal's relatively lacklustre debut reflected the weak stock market and the response to a downgrading of its share price by Goldman yesterday," said Chen Jinren, senior stock analyst at Huatai Securities.

"While it may dampen corporate fund-raising enthusiasm to some extent, a cooling down of speculation in new listings will actually benefit investors on the secondary market, giving them better returns."

Goldman cut its rating for China Coal's Hong Kong-listed H shares to neutral from buy, partly due to high valuation concerns.

China Coal's local-currency A shares 601898.SS closed up 31.9 percent at 22.20 yuan versus an IPO price of 16.83 yuan, well short of an expected first-day range of 26-32 yuan forecast by five industry analysts in a Reuters poll.

China's second-biggest coal producer, already listed in Hong Kong, drew $433 billion in subscriptions last month, making it China's third most popular domestic IPO.

Its debut rise was the lowest of any major domestic IPO since Industrial & Commercial Bank of China's 5.1 percent first-day gain in October 2006.

SUBDUED CEREMONY

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