HONG KONG -- Chinese e-commerce portal Alibaba.com soared on its debut on the Hong Kong stock market Tuesday, with its share price nearly tripling.
But analysts said the rise was unsustainable, and that speculators were driving up the price in order to maximize profits.
Shares of Alibaba.com - whose Web site allows companies in China and overseas to trade with one another online - rose as high as HK$39.95 (US$5.15; ��3.55) before closing at HK$39.50 (US$5.09; ��3.51), triple its issue price of HK$13.50 (US$1.74; ��1.20).
Demand has been heavy for Alibaba.com, which raised US$1.5 billion (��1.0 billion) through its global offering of 858.9 million shares, or a 17 percent stake, the biggest IPO by a Chinese Internet company.
The portion of its offering earmarked for retail investors - 25 percent of issued shares - was 257 times oversubscribed.
But analysts said the price did not reflect Alibaba.com's true value.
"There is a total absence of reason and cause" for the stock's sky-high price, Francis Lun, general manager at Fulbright Securities said. "It's irrational and foolish."
Lun said the amount of shares available to individual investors was very small, so speculators could easily push up the price and then cash out when the premium was high.
Hong Kong investors "trade stocks like they're playing at the baccarat table," he said.
It was the most traded share on the Hong Kong Stock Exchange Monday, with 536.08 million shares trading hands.
Some analysts had cautioned that the stock was inflated even at its issue price of HK$13.50 a share, but investors have been keen to tap the booming Chinese technology market.
"It's a great company. But it's very much a proxy for China, the Internet and the appeal of its founder, Jack Ma, and (the price) has nothing at all to do with the business fundamentals put on the table," Paul Woodward, business media consultant at Business Strategies Group.
Business Strategies Group had valued the entire business-to-business market in mainland China at US$1.41 billion (��970 million), Woodward said.
Ma said he thought the Hong Kong debut showed the stock was "reasonably" priced, and expected more Asian technology firms to follow suit and list in Hong Kong.
Alibaba.com is one of China's fastest growing Internet companies. Its registered members soared to 24.6 million in 2007 from 6 million in 2004. Paying members increased to 255,000 by June 2007 from 77,000 in 2004.
The company recorded a net profit of 295.2 million Chinese yuan (US$39.2 million; ��27.5 million) in the six months ended June 2007.
Analysts said they expect Alibaba.com to post a 63 percent rise in net profit next year to 1.02 billion yuan (US$136 million; ��93.87 million), and a 44 percent increase in 2009 to 1.47 billion yuan (US$196 million; ��135.28 million), Dow Jones Newswires reported.
Speaking in Taiwan on Monday, Ma said he wanted to turn the company into a "leading e-commerce platform for China, Asia, and even the world."
Yahoo Inc. holds a 39 percent stake in Alibaba.com's parent, Alibaba Group, and bought about US$100 million (��69 million) worth of Alibaba.com shares. Yahoo's stock climbed about 40 percent ahead of the IPO but shed 5 percent just after the HK$13.50 issue price was announced.
Hong Kong's benchmark Hang Seng Index, which slid 5 percent Monday in its biggest ever one-day points loss, closed up 1.71 percent at 29,438.13.
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