Shares in China Railway Construction, which built the world's highest railroad, rose 14 per cent in their Hong Kong debut on Thursday, in line with muted expectations, after the company raised a combined $5.4bn in a Hong Kong and Shanghai initial public offering.

The IPO is the world's largest this year and the most popular ever among Hong Kong retail investors, overcoming a shaky market that has seen more than $23bn in global IPO plans postponed or withdrawn, according to Thomson Financial.

The uninspiring debut amid a broader market that was down more than 2 per cent was expected to curb enthusiasm for other upcoming issues, with one broker saying it would have to close up about 20 per cent to reassure investors.

"If it can't close near HK$13, most of the big-cap IPOs like Pacific Insurance can forget about raising money in the first half. It's a key indicator," said Steve Cheng, associate director at Shenyin Wanguo.

China Pacific Insurance on Monday delayed a planned $4bn Hong Kong share sale due to poor conditions, but two others-China's Evergrande Real Estate and Taiwan snack maker Want Want China Holdings -are raising $2.1bn and $1.4bn, respectively, in ongoing Hong Kong IPOs.

Shares in China Railway Construction traded at HK$12.22 ($1.57) in early trade after opening at HK$12.40, compared with a Hong Kong IPO price of HK$10.70, which had been at the top of an indicated range. They rose as much as 18 per cent. The trading debut is only the third of the year in Hong Kong, as several deals have been delayed or scrapped.

In grey market action on Wednesday, the stock traded at HK$12.10 on the Instinet platform, while it traded at HK$12.64 ¨C a gain of 18 per cent, on another grey market platform, according to the Hong Kong Economic Times.

China Railway Construction and its duopoly rival, China Railway Group , are beneficiaries of Beijing's heavy spending on a transport infrastructure that has been unable to keep up with the country¡¯s surging economy.

China Railway Construction's Shanghai shares rose a weaker-than-expected 28 per cent in their trading debut on Monday, compared with their IPO price of 9.08 yuan. The stock closed at 12.00 yuan on Wednesday in Shanghai, 32 per cent above its IPO price.

The company, builder of the Qinghai-Tibet railway, the world's highest, raised 22.2bn yuan ($3.1bn) in mainland China's 11th-biggest IPO.

It raised $2.3bn from its Hong Kong offering, generating orders worth HK$534.8bn ($68.6bn) from local retail investors alone to rank as the most popular IPO ever among individuals in the city.

The Hong Kong offering price values the company at 28.67 times forecast 2008 earnings. Rival China Railway Group trades in Hong Kong at 33.3 times forecast 2008 earnings, while top ports builder China Communications Construction Group trades at 30 times.

South Korea's Daewoo Engineering & Construction trades at 12.6 times projected 2008 earnings while Gammon India trades at 24 times forecast profit for the year ending March 2009.

Hong Kong's benchmark Hang Seng Index has dropped nearly 16 per cent so far this year, after jumping 39 per cent last year, amid global financial turmoil.

China CITIC Securities sponsored both the Shanghai and Hong Kong portions of the offering, while Citigroup and Macquarie Bank handled the Hong Kong IPO.

China, aiming to ease bottlenecks caused by its surging economy, earmarked more than 5bn yuan for transport infrastructure spending in its five-year plan for 2006 through 2010, including 1,250bn yuan for railways, or four times the amount under the previous five-year plan.

The fragility of China's transport links was exposed by snowstorms earlier this year that crippled movement of people and goods in large parts of the country.

While China Railway Construction's IPO is on track to be the world's largest since Spanish green energy group Iberdrola Renovables raised $6.5bn in December, it would be surpassed by the potentially $18.8bn share sale planned by US-based Visa , the world¡¯s largest credit card network.