Shares in China Merchants Energy Shipping Co, the country’s top oil carrier, soared as much as 81 per cent on their debut on Friday, boding well for other major companies that plan to list in Shanghai.

Authorities this year began encouraging some of China’s top companies to list in Shanghai, hoping to make the domestic stock market an attractive fund-raising destination for big firms and wean them off reliance on foreign markets. Merchants Ship, which last week completed China’s fifth-largest IPO this year, closed at 6.37 yuan, 72 per cent above its offer price.

It had climbed as high as 6.70 yuan. The rise eclipsed the first-day performances of other heavyweights that have listed in Shanghai’s booming market this year. Many Chinese investors have traditionally preferred to focus on the listings of smaller stocks, which tend to be more volatile and provide bigger short-term trading gains.

The maximum gain for Industrial & Commercial Bank of China on its debut in October was 10 per cent. Bank of China rose as much as 31 per cent and Daqin Railway as much as 29 per cent. “Merchants Ship’s strong debut indicates increased investor interest in blue-chip large caps,” said analyst Zhou Fengwu at Orient Securities.

Large-cap IPOs expected in coming weeks or months include Guangshen Railway, the largest rail operator in southern China, and China Life Insurance, the country’s top life underwriter. Merchants Ship raised 4.45 billion yuan ($569 million) in its IPO, which accounted for 35 per cent of its expanded capital. The offer was heavily oversubscribed, attracting about 380 billion yuan of funds.

“One reason for the stock’s jump is that most of the money locked up during Merchants Ship’s subscription has returned to the market since last Friday, causing a surge in liquidity,” said analyst Cao Xuefeng at West China Securities.

Some analysts expressed unease at the size of Merchants Ship’s first-day gain. Its closing price was 20 times forecast 2006 earnings, compared with more than 10.5 times for major rival COSCO Shipping and over 11 times for China Shipping Development Co, according to Reuters data.