China Coal Energy, the nation's second-largest producer of the fuel by market value, is expected to rise sharply in its debut on the Shanghai Stock Exchange today despite weak market sentiment.
However, it is unlikely to repeat the stellar debuts of fellow energy stocks PetroChina and China Shenhua Energy late last year, even after its 25.67 billion yuan A-share offer was 122 times subscribed thanks to a low final price of 16.70 yuan compared to its H shares.
'I think China Coal should have no problem reaching 25 yuan on its first trading day,' said Nomura Securities analyst Donovan Huang. 'Although overall market sentiment is not good, investors' fervour for coal stocks is still there.'
PetroChina's debut in October saw the stock jump 163.2 per cent, although it has since retreated, while Shenhua Energy soared 87.3 per cent on its first day. The Shanghai Composite Index has declined 7.94 per cent this week.
Mr Huang said the long-term up-trend of coal prices had not changed despite seasonal fluctuations, with tight demand in China and Australia.
Coal-mining stocks have fallen in the past two days on speculation Beijing may exert price controls amid surging spot prices, a result of decreased supply amid transport bottlenecks due to the snow storms. Beijing has imposed price controls on basic foods, energy and services.
Some analysts said the government might not be able to impose price controls effectively given the vast number of small coal mines and a failed attempt in 2005.
