Shares in the mainland’s second-largest nickel producer Xinjiang Xinxin Mining Industry more than doubled in this year’s best Hong Kong trading debut on October 12.

Its shares surged 119 percent to HK$14.24 over the initial public offering (IPO) price of HK$6.5. It hit an intra-day high of HK$14.9.

The company, which rivals Jinchuan Group, outperformed the broader market. The benchmark Hang Seng Index slumped 294.65 points to 28838.369 after it reached a record high on October 11.

The stellar performance reflected investor confidence in sustained demand for industrial material nickel amid the mainland’s long-term economic growth, analysts said.

The mainland’s booming economy has fueled exponential growth in demand for nickel, a fundamental metal used to produce stainless steel. Domestic consumption of nickel reached 271,000 tons in 2006, or 19.3 percent of the world’s total consumption of the metal.

Low valuation also helped push up the company’s share price, analysts said.

“Its shares are very cheap,” said Louis Wong, director of Phillip Securities. “The market value of the company is currently about HK$28 billion with a price-earnings (P/E) ratio of 28 times. It is very reasonable.”

Wayne Fung, an analyst at China Everbright Research, agreed. “The pricing for the IPO wasn’t aggressive. There was a big discount valuation in terms of its P/E ratio. At HK$6.5 apiece, Xinxin’s P/E was only 17 times.”

This compared to another listed metal mining company China Molybdenum, whose P/E ratio was at 30 times, while many metal companies were already trading at a P/E of 40 times.

Resources equities rose across the board recently as investors favored less-depreciable basic and precious metal assets in the face of the weakening US dollar.

“Metal-related stocks showed strong momentum to go up after the US Federal Reserve trimmed interest rates last month. The depreciating US dollar and the hot equities market provided strong support for these stocks,” said Fung.