Shares in Shimao Property, a Shanghai-based property developer, surged 5.6 per cent on its trading debut yesterday, signalling concern over cool-down measures imposed by the central government in May has eased.

Shares in Shimao jumped to HK$7 (90 US cents) before closing at HK$6.6 (85 US cents) per share, or 5.6 per cent above their issue price of HK$6.25 (80 US cents). That outperformed Hong Kong's benchmark Hang Seng Index, which closed 0.62 per cent lower.

The high-end property developer, which raised HK$3.7 billion (US$474 million) in its initial public offering (IPO), saw 163 million shares traded yesterday, involving HK$1.09 billion (US$140 million).

Local investors were concerned that a raft of measures introduced by the central government in May would sour the property market by reining in investment in high-end property sectors in big cities like Shanghai, Beijing and Guangzhou. Shimao was believed to be within the group of developers to be most affected.

But "Shimao's solid trading debut shows that the worst is over," according to Clive Zhang, a fund manager at Partners Capital Asset Management.

"Mainland property stocks have rebounded in the last couple of days. Although regulatory uncertainties remain, there are still high levels of interest in Asia's property stocks," a Hong Kong-based property fund manager said.

The cool-down worries reached a peak last month resulting in an undersubscription of the retail tranche of Shimao's IPO and a cheap pricing. Last week Shimao priced its IPO at about 40 per cent below its net asset value, or HK$6.25 (80 US cents) each, the bottom of an indicated range, after generating weak investor demand  2.5 times subscribed in the institutional portion and only 54 per cent covered in the retail tranche.

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