CHINA Pacific Insurance Co.’s local-currency A shares tumbled as much as 8.11 percent yesterday, becoming the first major stock to fall below its initial public offering (IPO) price since May 2006.

Shares in Pacific Insurance, China’s third-biggest life insurer, fell as low as 27.98 yuan (US$3.97), compared with its IPO price of 30 yuan.

“Investors are worried that a slumping stock market will hit investment returns of domestic insurance companies this year, in particular in the first quarter,” said insurance industry analyst Wu Yonggang at Guotai Junan Securities.

“We are not optimistic about the short-term earnings prospects of domestic insurers,” he said.

Brokers said institutions that bought Pacific Insurance shares during its offer last year apparently wanted to avoid possible losses. A total of 300 million such shares became freely tradable yesterday after a lock-up period.

The Shanghai Composite Index has dived 30 percent so far this year, hit by huge corporate fundraising plans, worries over monetary tightening steps and weak global markets. The index was 0.63 percent lower yesterday at 3,606.86.

Pacific Insurance’s slide below its IPO price bodes ill for forthcoming share offers.

The Shanghai and Shenzhen stock exchanges have not seen a single IPO since March 5, when laser equipment maker Fujian Fujing Casttech raised 370 million yuan.

Pacific Insurance shares rose 61 percent from their IPO price on the listing day Dec. 25 last year to hit a record high of 51.97 yuan.  (SD-Agencies)