China Everbright Securities' 30 percent rise on its Shanghai debut, subdued by China standards, suggests investor demand may be cooling after previous soaraway debuts fuelled concerns over price bubbles.

The price rise for the $1.6 billion IPO by China's 10th-largest brokerage was in line with expectations given a recent stalling in China's strong stock market rally, and analysts said they did not expect a major slowdown in IPO approvals.

The market was too crazy towards previous IPOs this year, partly due to a long IPO suspension, said Yu Chong, analyst at Century Securities Co. Today's debut price is more rational and is also a reflection of recent market corrections.

Local-currency A shares in Everbright Securities opened at 30 yuan, 42 percent higher than their 21.08 yuan IPO price, and closed at 27.4 yuan -- in line with market forecast.

Chen Gang, strategist at Xiangcai Securities, doubted the relatively muted debut would have a long-term impact on IPO approvals, especially as a decline in bank lending since last month increases the importance of other forms of fund-raising.

I don't think the regulator will slow down the pace of approving new IPOs, although the offering did put some pressure on the market, he said.

Wei Tao, an analyst with CITIC China Securities Co, added: Regulators will continue to approve new listings, but will be cautious on heavyweights.

Sister company Everbright Bank has completed a restructuring in preparation for a listing, Everbright Securities Chairman Tang Shuangning told a news briefing on Tuesday.

Rival China Merchants Securities has also been waiting for government approval for a year to sell 358.5 million shares in an IPO that analysts have said could raise up to 5 billion yuan ($732 million).

UNBRIDLED SPECULATION

Last month, shares in China State Construction Engineering Corp rose more than 50 percent on their trading debut and Sichuan Expressway more than tripled, as investors clamoured for the first Shanghai listings since the lifting of a 10-month suspension of mainland IPOs.

Those sharp gains prompted concerns about unbridled speculation, although both stocks have steadily retreated since then, while holding above their IPO prices.

The benchmark Shanghai Composite Index .SSEC has fallen more than 16 percent from a 14-month intraday peak reached nearly two weeks ago.

Monday's 5.8 percent slide was the index's biggest one-day drop in nine months, amid worries about stretched valuations compounded by signs of a slowdown in the economic recovery, a clampdown in bank lending and new supplies of equity. The index rose 1.4 percent on Tuesday.

Everbright Securities' offer of 520 million shares, or 15 percent of its expanded capital, valued the company at 72 billion yuan, or nearly 60 times its 2008 earnings, in the mainland's second-biggest IPO this year.

That compares with an historical price-earnings ratio of 28 for CITIC Securities Co, China's largest listed brokerage and the only other securities house to list on the mainland via an IPO. Several others have listed through reverse takeovers of listed firms or other means.

Analysts said Everbright's earnings were expected to get a bigger boost from the market's rally this year than its larger rival, due to its heavier reliance on the brokerage business and proprietary trading. Century Securities' Yu forecast its net profit may double this year to 2.7 billion yuan.

Chinese brokerages' earnings were bolstered by a 60 percent rally in Chinese stocks in January-June, boosting their commission income and investment returns. CITIC Securities posted a 3.6 percent rise in second-quarter profit.

Everbright Securities, which recently bought control of its insurance venture with Prudential Financial and set up an asset management unit, will use the IPO proceeds to diversify its revenue sources and expand outlets, Vice Chairman Luo Zhefu said.

It is preparing to venture into new businesses such as margin trading and short selling and will establish a base in Hong Kong from which to expand overseas. It may also pursue acquisitions to build up its brokerage network in mainland China, Luo said.

Everbright Securities, which hired Orient Securities to arrange its IPO, is controlled by China's second-biggest financial conglomerate, Everbright Group.

($1=6.834 Yuan)

 (Additional reporting by Rujun Shen and Alfred Cang; Editing by Ian Geoghegan)