SHANGHAI, Dec 16 (Reuters) - Shares of New China Life Insurance Co.,Ltd. jumped nearly 14 percent on the first day of trading in Shanghai on Friday, bucking a dismal debut in Hong Kong a day earlier in a sign that mainland investors are more optimistic about the country's third-biggest life insurer.
The insurer, 15 percent owned by Swiss insurer Zurich Financial Services AG, closed the day at 26.44 yuan, compared with its Shanghai IPO price of 23.25 yuan, which was fixed at the bottom of an indicative range.
The rise was partly aided by a 2 percent rebound in China's main stock index that was fuelled by speculation of government support. In contrast, New China Life shares traded in Hong Kong gained 2.1 percent after falling 10 percent on their debut on Thursday.
"Hong Kong investors seem to be more bearish than mainland investors," said Zeng Sufen Fen, an analyst at Industrial Securities Co. "I think New China Life is unlikely to fall below its IPO price in Shanghai, although there's not much of an upside either under the current market environment."
New China Life, which is in desperate need of fresh capital, is braving a volatile stock market rocked by growing concern over the global economy and the euro zone debt crisis.
The insurer, controlled by the Chinese government, raised $1.9 billion in a dual listing in Hong Kong and Shanghai. It raised 3.69 billion yuan ($578.96 million) in the Shanghai leg after selling 158.8 million shares.
China International Capital Corp (CICC) and UBS Securities were lead underwriters of the Shanghai offering.
MARKET TUMBLE
China's stock market has tumbled more than 20 percent this year to a 33-month low as an economic slowdown, a cooling property market and monetary policy tightening sapped investor confidence.
Weak investor sentiment has forced some companies to delay or scale back their IPO plans.
Haitong Securities Co Ltd, China's second-biggest listed brokerage, on Tuesday postponed its planned $1.7 billion Hong Kong stock offering.
However mid-sized Chinese brokerage Soochow Securities Co Ltd, the latest financial firm to debut on the mainland market, rose 13 percent on its first day of trading on Monday.
A number of large IPOs worth billions of dollars, including those of China Communications Construction and Shaanxi Coal Industry Co, are being added to the pipeline after smaller deals dominated this year, raising some concern of oversupply in the market.
Chinese companies raised about $34.9 billion from first-time share sales in the first nine months of the year, down 37 percent from a year earlier, Thomson Reuters data showed.
New China Life is the third-largest life insurer in China by market share after China Life Insurance Co Ltd and Ping An Insurance (Group) Co of China Ltd .
Despite New China Life's solid debut on Friday, analysts warned that insurance stocks face headwinds ahead as premium growth slows and the stock market remains sluggish, weighing no investment returns.
"New China Life's stock price is quite reasonable...still the company's shares could be dragged down by a really weak market in coming weeks." said Chen Yi, analyst at Xiangcai Securities in Shanghai.