SHANGHAI (Reuters) - Shares of Guosen Securities Co Ltd <002736.SZ> rose a daily maximum 44 percent on their Shenzhen exchange debut on Monday, after the mid-sized brokerage raised 7 billion yuan (723 million pounds) in China's largest initial public offering (IPO) since 2011.
The listing came after a near 30 percent rally in the Shenzhen market over the past two months, largely led by gains in financial shares such as those of banks and brokerages.
Shares of Guosen Securities opened at 7 yuan versus their IPO price of 5.83 yuan. They then rose to 8.4 yuan after a temporary trading halt triggered by the stock reaching 33 percent of its IPO price.
Brokerages' shares have been buoyed by a central bank interest rate cut last month and a scheme to allow direct trading of Hong Kong and Shanghai stocks on each other's bourse. That has fuelled an influx of retail investors and a jump in trading volumes in a year in which mainland IPOs restarted after a lengthy hiatus.
Analysts forecast that brokerages are set for bumper earnings in 2015, partly explaining the strong demand for Guosen's IPO.
The listing of Guosen, one of China's leading underwriters of IPOs for smaller firms, was the largest since Power Construction Corp of China Ltd (SS:601669) raised over 13 billion yuan in 2011.
GF Securities sponsored the IPO, the funds of which Guosen will use to bolster working capital.
Guosen's price-to-earnings ratio - a gauge of the valuation of a company - was just 22.97 when its IPO price was set. The subsequent market rally has seen the ratio of financial companies average as much as 75.87.
China's regulators, which once capped IPO prices, have moved to give the market a strong role in the listing process.
Guosen, established in 1994, has registered capital of 7 billion yuan, according to its official website.
(Reporting by Adam Jourdan and Samuel Shen; Editing by Christopher Cushing)