Shares of South Korean technology services firm SK C&C Co Ltd soared as much as 22 percent on the company's trading debut on Wednesday, drawing strong interest from local institutions.

Analysts said the rally could prove short-lived in a sluggish broader market in the lack of economic momentum, but fund managers picked the affiliate of top mobile carrier SK Telecom as a major stock to be included in their portfolios.

SK C&C's debut comes amid signs Asian initial public offerings are losing steam because of renewed economic uncertainty, with many companies trimming high pricing expectations or shelving offerings because of weak demand.

Recent IPOs in South Korea, including Tong Yang Life Insurance and spirit maker Jinro Ltd, were priced at the bottom of their indicative ranges or below.

Analysts saw the strong market reaction to SK C&C as excessive in the absence of market-leading stocks, and would not indicate an turnaround in market sentiment overall.

Under prevailing market conditions, investors seem to find the newly listed shares an attractive alternative investment, said Yun-chae Park, executive director at Kiwoom Securities. We see the outlook for SK C&C as bright, but that doesn't mean the South Korean IPO market is going to improve any time soon.

The technology outsourcing company opened at 32,250 won, above its IPO price of 30,000 won, which was set at the middle of its indicated range. The IPO raised 540 billion won ($465.7 million) for its two main shareholders, SK Telecom and SK Networks.

The stock, with a market cap of 1.8 trillion won, traded at 35,450 by 0532 GMT, after rising to a session high of 36,550, a 22 percent gain on the IPO price, in contrast to a 0.34 percent rise in the benchmark KOSPI .

TOP SHAREHOLDER OF SK HOLDING

SK C&C's IPO has been in the spotlight because the listing was part of SK Group's restructuring into a holding company. The technology services company is the top single shareholder in SK Group's holding company SK Holding with a 32 percent stake.

It is at the top of SK Group's holding company and has a clear shareholder structure, said a fund manager at Midas Asset Management, which holds SK C&C shares.

We had subscribed to the stock on expectations for 20-30 percent upside potential. It is worth holding for now, said the fund manager, who asked to remain anonymous as he was not authorised to speak to the press.

Fund managers say market interest will stay centered on sizeable IPOs such as SK C&C going forward.

Taeyearl Rah, an analyst at Hanwha Securities, said SK C&C had strong fundamentals in telecommunications and finance-related service businesses, and was of strategic importance to parent SK Group.

The company certainly has some merit in drawing investor attention as the third-largest system integration services provider in South Korea, after Samsung SDI and LG CNS, he said.

POSCO Engineering & Construction Co Ltd., a building unit of steelmaker POSCO (005490.KS), cancelled its IPO last month, which had been aimed at raising $912 million.

Korea Life Insurance Co, the country's No.2 life insurer, is preparing for a $2 billion IPO, expected next year. ($1=1159.5 Won)

(Editing by Chris Lewis and Jonathan Hopfner)