Despite share prices being set at $HK7.50 ($A1.25), near the bottom of a proposed range, investors were cautious and the shares closed Wednesday at $HK7.30 after trading in the $HK7.40-7.70 range. Concerns about the pace of China’s economic growth and a belief global coal prices had peaked are believed to be behind the relatively cool reception.

Alfred Chan, head of research at Cheer Pearl Securities, expected the shares to fall further on the second day of trading toward $HK7.

Of 13 companies floated on the Hong Kong exchange since the beginning of this year, five were trading below their IPO price, Reuters reported.

One analyst said the weak debut performance provided a good chance for mid-term investors to buy shares, saying Shenhua should trade at a premium to competitor Yanzhou given the former company’s superior quality at an estimated mid-term target of $HK9.

The Shenhua offering raised $HK22.5 billion ($A3.76 billion) and was eight times subscribed by institutional investors and 16 times by retail investors. Anglo American, the world’s second-largest mining group, bought $US650 million of shares in the IPO.

Shenhua has proven reserves of 5.9 billion tonnes and has diversified into transport and power production, providing a buffer against falling coal prices.

In 2004, the company exported around 26% of its coal, or a third of China’s total coal exports. The IPO was managed by Merrill Lynch, Deutsche Bank and China’s CICC.