Shaanxi Coal debut hit by volatility in China\\\'s reopened IPO market

SHANGHAI, Jan 28 (Reuters): Shares of Shaanxi Coal Industry Co Ltd jumped in their Shanghai debut but came off earlier stratospheric highs in a roller coaster day as China's newly reopened initial public offering market drew out aggressive punters.
Shaanxi Coal, which raised $660 million in the biggest mainland China listing since 2012, had soared by its daily limit of 44 per cent in early trade. That triggered a suspension until five minutes before the market's close and prompted an announcement from the exchange that it had taken measures against two retail investors who had driven the price up aggressively.
When trade restarted, it plunged to end a comparatively mild 13.8 per cent higher at 4.55 yuan. Most of the shares changed at an average price of 4.69 yuan, data showed, underscoring the unusual nature of the high of 5.76 yuan earlier in the session.
China's re-opening of its IPO market after a 14 month freeze has been marked by huge first day "pops" for new issues due to pent-up demand as well as relatively cheap valuations after companies, including Shaanxi Coal, priced IPOs low amid heightened regulatory supervision.
The moratorium had been put in place to carry out reforms aimed at weeding out speculation and restoring investor confidence in the stock market.
Helen Lau, a senior analyst at UOB Kay Hian Ltd in Hong Kong, said that while Shaanxi Coal, China's third-largest listed coal miner, had better earnings potential than rivals due to better coal quality and higher production rates, the early 44 per cent jump did not reflect fundamentals.
Shaanxi Coal, a state-owned giant based in China's coal-rich northern province of the same name, competes with China Shenhua Energy Co Ltd and China Coal Energy Co Ltd in a highly fragmented market. Shenhua is the biggest listed miner but only produced about 10 per cent of mainland coal volumes in 2013.
Shaanxi Coal had cut its IPO target by 60 per cent from an estimate made earlier this year - one of the companies that appeared to have been affected by the increased oversight.
The China Securities Regulatory Commission said this month it would increase supervision of IPOs and has begun inspections of IPO pricing behaviour.