Shares in China Cosco, the Chinese shipping giant, today sank 10 per cent on their debut in Hong Kong amid fears that the maritime sector is heading for stormy waters and raising a question mark over China's economic prospects.

The mainland’s largest container shipping company, and the world’s seventh largest, closed at HK$3.825, sharply down from its IPO price of HK$4.25. The shares hit a low of HK$3.70 on their first day of trading.

The $1.22 billion (£680m) initial public offering had been pitched at the bottom end of the indicative range of HK$4.25 to HK$5.75 after suggestions that despite healthy demand from Japanese institutions, interest in the retail offering was thin, falling short of fulfilling the 10 per cent stake originally offered to the public.

Hong Kong’s biggest IPO so far this year has been China Shenhua Energy, which raised $2.95 billion.

Bulk-shipping companies, which carry commodities such as coal and iron ore, have enjoyed massively improved fortunes on the back of China's explosive economic growth and greatly boosted steel production. Container shipping has also benefited from an upturn in the world economy.

However, analysts have suggested that slower economic growth, coupled with a shift in the profile of the world's freight fleet as new ships are launched and older vessels kept in service for longer periods, could mark the apex of maritime industry's cycle.

The Baltic Dry index, which represents a basket of prices paid for chartering bulk cargo vessels, reached an all-time high in December, driven by Chinese iron ore imports, but has since more than halved. Some analysts have suggested the fall could be an early indication of a slowdown in China.

Cosco had predicted flat profits this year of around 4.15 billion yuan this year.

"Cosco moved in line with other shipping counters amid concerns over the shipping cycle’s [expected] downturn in the next 12 to 18 months. So there is really selling pressure on the whole sector," Mathew Kwok, an analyst at Tanrich Securities, told AFP.

Andrew To, sales director at Tai Fook Securities, said: "Shipping stocks are currently under pressure because they had a good run early this year, with some of them gaining by over 10 per cent in the first half".

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