Air China Ltd, one of Shanghai's most high-profile listings this year, was also the worst-performing as high fuel prices and a weak overall market plagued its first day of trade on Friday.
China's flag carrier closed at 2.80 yuan, unchanged from its domestic initial public offer price and at the bottom of traders' expectations for a first-day range of about 2.80-2.95 yuan.
The stock opened at 2.78 yuan and moved between 2.74 and 2.81 during the day. Some traders said large institutions, anxious to avoid a worse blow to market sentiment, may have intervened to ensure that the stock did not close below the IPO price.
It was the first time in several years that a stock opened below its IPO price in mainland China, analysts said, and by far the worst first-day performance among the dozen firms which have listed in China's domestic stock markets since regulators lifted a year-long ban on listings in May.
"A strong performance hadn't been expected, but this will still cast a shadow over future IPOs. It's a lesson to learn for the regulators," said Zhou Lin, analyst at Huatai Securities.
To some extent, Air China was the victim of poor timing. Though analysts believe the airline stayed in the black in the first half of this year, the industry is plagued by rising fuel prices, and Shanghai's market has been soft for the past month.
In addition, Chinese investors have shown signs of a flagging appetite for fresh equity in the short term, after a flood of IPOs triggered by the lifting of regulators' ban.
The ambitious pricing of Air China's offer did not help, analysts said. The price of 2.80 yuan left the airline's Shanghai A-shares at a discount of just 2 percent to the closing price of its Hong Kong-listed H-shares on Thursday - not a large enough discount to attract many investors' interest.
To complete its $575 million offer, the airline was forced to slash the number of shares sold by nearly 39 percent and to make an unprecedented promise to buy back up to 600 million shares if they fell below the IPO price by year-end.
Analysts said the poor listing would not derail China's plans to list dozens more companies, including some of its biggest, on domestic stock markets over the next year. But they said the affair showed the Shanghai market's growing pains as regulators work to transform it into one of Asia's premier bourses.
"They have tried to do too much, too quickly," said a foreign investment banker in Shanghai, while remaining optimistic about the long-term prospects for the market.
The opening price gave Air China a market value of 30.8 billion yuan ($3.9 billion) and a valuation of 18.5 times diluted 2005 earnings - cheap compared with most other Chinese airlines, which have been losing money, but not particularly attractive against a ratio for the Shanghai market of near 20 times.
Underlining the travails of the airline industry, China Southern Airlines, the country's biggest carrier by fleet size, on Friday reported a first-half net loss of 835 million yuan, barely improved from a 843 million yuan loss a year earlier.
Because of Air China's promise to buy back shares if needed, analysts do not expect a sharp fall below the IPO price in coming months. But a drop of a few percent is possible if impatient local investors shun the stock in search of larger gains elsewhere. When the buy-back offer expires at the end of this year, the stock may be vulnerable to larger falls. Because a sluggish Air China debut had been expected, it did not hurt the overall stock market.