UPDATE 4-China South Locomotive disappoints in HK debut

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By Kennix Chim

HONG KONG, Aug 21 (Reuters) - Shares in China South Locomotive & Rolling Stock Corp Ltd (1766.HK), the country's largest train maker, rose a disappointing 1 percent in their Hong Kong debut as investor enthusiasm was sapped by a sharp sell-off in the broader market.

Despite a rousing Shanghai debut after it raised a combined $1.5 billion in a Hong Kong and Shanghai listing, China South Locomotive could not overcome Thursday's 2.6 percent drop in the Hang Seng Index .HSI, dampening the outlook for upcoming IPOs.

"Fundamentally, the stock is attractive as it will benefit from China's transportation expansion plan and its valuation is low, but stock markets are so weak, the firm is under selling pressure in the short term," said Teresa Chow, fund manager at RBC Investment Management.

Glorious Property Holdings Ltd and Longfor Properties Co Ltd, each looking to raise $1 billion from Hong Kong IPOs, have put their listings on hold even though they have approval from Hong Kong regulators.

Investors crowded into China South Locomotive's IPO, lured by a railway investment boom in the world's fourth-largest economy and the stock's low valuation, raising expectations that this year's moribund Hong Kong IPO market might be returning to life.

That hope may have been premature.

"After the tumble in the market, many blue chip valuations are very attractive now. Investors prefer buying from the secondary market to the primary market, which makes launching IPOs difficult," said Steven Leung, director of institutional sales at UOB-Kay Hian.