Shares in Chinese alumina producer Aluminum Corp of China (Chalco) nearly tripled in their Shanghai debut, valuing it on a par with world leader Alcoa Inc.

The first-day gain also left Chalco`s Shanghai-listed A shares at a 102% premium to its Hong Kong-listed H shares, underlining concern that a bubble might be building in Chinese stocks as investors keep pouring in new money.

Chalco`s A shares opened at Yu20.07 (US$2.60), well above analysts` expectations of a debut between Yu10 (US$1.30) and Yu15 (US$1.94), against their offer price of Yu6.60 (US$0.85).

They then pulled back slightly to end the day at Yu18.51. That gave Chalco a market capitalisation of Yu238 billion (US$30.9 billion) just below the US$31.3 billion market value of the world`s largest aluminium producer, Alcoa.

Chalco surpassed the Yu194 billion market value of steel maker Baoshan Iron & Steel Co - the previous leader in China`s metals sector - to become the country`s eighth-largest stock.

“Chalco`s surge shows investors welcome the return of an industrial leader in the metals sector,” said metal industry analyst Cai Luoyi at China International Futures.

The Shanghai listing of Chalco, and other companies in sectors such as telecommunications which are expected to list later this year, could create a more healthy stock market while attracting fresh investor interest in the long term. Indeed, some analysts said Chalco`s stock price was justified.

“With prices of Chinese metal stocks remaining relatively low compared to shares in red-hot sectors such as banks, Chalco`s A-share price is actually not that high,” said Cai.

“Its price surge is likely to help push up other metals stocks in the medium term,” he added.

Chalco, 8% owned by Alcoa, is the latest in a series of top Chinese companies to list on the domestic stock market over the past 10 months. It listed through a share offer to buy out two units, smelter Lanzhou Aluminium Co and alumina maker Shandong Aluminium Industry Co, in a deal worth over US$1 billion.

Chalco`s A shares were valued at 19 times 2006 earnings per share - higher than 15 times for Baoshan Iron & Steel, and 16 times for another top metals stock, Jiangxi Copper Co.

But it remained well below the giddy heights of the financial sector, where Industrial & Commercial Bank of China`s A shares were valued at 32 times.

Chalco`s Chairman Xiao Yaqing said on Monday that his company`s share price was reasonable.

“The stock price is not too far from our expectations, and shows investors are becoming more and more mature,” Xiao said.

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