SHANGHAI: China State Construction Engineering Group shares soared more than 60 percent at their Shanghai debut Wednesday, as investors jumped at the world's largest stock offering in 16 months.

China's largest home builder ended the two-hour morning session at 6.91 yuan (one dollar), up 65.3 percent from an initial public offering price of 4.18 yuan, according to traders.

The IPO last week raised 50.16 billion yuan, making it the largest since US credit card group Visa Inc. raised 19.7 billion dollars in March 2008, according to financial data provider Dealogic.

But the huge interest in the company that built Beijing's "Water Cube" Olympic aquatics centre set alarm bells ringing that the market was losing touch with the fundamentals.

Wang Mingzhi, a Shanghai-based analyst with GF Securities, said the share price was now high above a "fair value" of about five yuan, which he said would more adequately reflect the company's actual earning potential.

"The jump is obviously driven by speculative funds. It's hard to find a rational explanation," he told AFP.

China ended a nine-month moratorium on new IPOs in June, but it remains wary about overly dramatic price fluctuations on the first day of trading.

While allowing new IPOs, the securities regulator has issued rules aimed at reining in large surges in the price of newly listed shares, including a ban on investors using multiple accounts.

Banking regulators have also tightened lending rules in an attempt to prevent bank loans, extended as part of China's economic stimulus measures, from being used to speculate on the stock market.

But the moves seem to have had little effect. Sichuan Expressway, China's first IPO after the moratorium, soared 175 percent at its debut in Shanghai on Monday.

Mao Nan, a Shanghai-based analyst with Orient Securities, called China State Construction Engineering Group's stock price "overvalued", saying it reflected the impact of speculative funds from both China and overseas.

"Hot money is flowing into the share market at the moment. With lots of cash at home and capital flowing in from abroad, the main problem of the market is excessive liquidity," he said.

While share prices are allowed only to fluctuate within a daily 10-percent trading band, there are generally no limits on how much they can move on the first day of trading in China.

The underlying logic is that Chinese shares usually rise steeply on their debut, and it is considered better to let the investor enthusiasm play itself out within just one session.

The alternative would be that newly listed Chinese shares would close limit-up for several sessions after their initial debut.