SHARES in Sinohydro Group, China's biggest dam builder, surged as much as 38 percent in their Shanghai debut yesterday, triggering a temporary suspension because of "abnormal" trading.

The sharp rise reflected investor confidence that the company will benefit from China's investment in more hydropower facilities, but a high turnover rate yesterday also indicated the price gain may not be sustainable.

Sinohydro rose to 6.23 yuan (98 US cents) from its initial public offering price of 4.50 yuan at 10:56am, before it was temporarily suspended by the Shanghai Stock Exchange for 30 minutes because of "abnormal" trading. The stock rose 17.11 percent to close at 5.27 yuan, with 93.96 percent of the shares changing hands. The Shanghai Composite Index fell 2.3 percent yesterday.

"The high turnover rate means the buying was largely arranged to support the share performance," Huatai Securities strategist Chen Huiqin said. "Probably Sinohydro would tumble by the 10 percent daily limit tomorrow."

She also said Sinohydro's strong debut may hurt the market.

"This could send a message to the stock regulators that the market is capable of digesting large IPOs, and then more big IPOs could come," which may drain liquidity from existing stocks, she cautioned.

Sinohydro, builder of the Three Gorges Dam, raised US$2.1 billion from the IPO, the largest this year on the Chinese mainland