By Ding Yining | 2012-4-28 | NEWSPAPER EDITION
THE online business of the Chinese Communist Party's flagship newspaper, People's Daily Online, surged as much as 78 percent on its debut in Shanghai yesterday, and trading had to be halted twice.
The stock jumped to an intraday high of 35.60 yuan (US$5.56) before closing at 34.72 yuan, up 74 percent from its offer price.
At 10am, the stock was suspended from trading for 30 minutes after rising 10 percent from its opening price of 31.01 yuan. Trading was suspended again at 10.37am when the turnover rate hit 80 percent. Transactions were restored shortly before close at 2:55pm.
Rules that temporarily halt trading in new shares were introduced by the Shanghai Stock Exchange in early March to rein in speculative manipulation of prices of newly listed shares
Market demand was strong as People's Daily Online was the first news website to go public on the domestic market.
"Investors are enthusiastic over the debut of People.cn because it's a state-backed media and is authoritative in distributing news on the Internet," said Qi Jianzhe, a researcher with Beijing-based Internet consultancy Analysys International. "However, it has a very limited revenue stream compared with other news portals like Sina and Sohu."
He estimated the share price would soon return to a "reasonable" level of 25 to 26 yuan.
The company sold 69.1 million new shares at 20 yuan apiece, or 46 times its estimated earnings in 2012, and raised 1.38 billion yuan.
The money will be used to upgrade technology, deliver news on mobile platforms and strengthen its editorial team, the news site said.
Yesterday's gains value People's Daily Online at 9.6 billion yuan, more than the New York Times Co's US$938 million.