April 30 (Bloomberg) -- Aluminum Corp. of China Ltd. shares surged as much as threefold on their first day of trading in Shanghai, buoyed by a rally that's made the nation's stock market the most expensive in Asia.

China's biggest aluminum maker, known as Chalco, closed at 18.51 yuan compared with its issue price of 6.6 yuan, making it the nation's seventh-biggest company by market value. Chalco, with shares traded in Hong Kong and New York, issued stock in Shanghai to buy out two local units.

The company's yuan shares are now twice the price of its Hong Kong stock. China's benchmark share index tripled in the past year as local investors, barred from buying equities overseas, ignored official warnings of a bubble and government efforts to slow the world's fastest-growing major economy.

``The current price of Chalco suggests the stock is overvalued,'' said Lu Yizhen, who oversees $640 million of shares at Citic-Prudential Fund Management Co. in Shanghai. ``The fundamentals for aluminum are not so good.''

The company's yuan-denominated stock earlier rose as much as 20.07 yuan. The company's Hong Kong-traded shares fell 0.4 percent to HK$9.29, or the equivalent of 9.15 yuan. They gained 21 percent in the past year.

China's benchmark CSI 300 Index trades at 39 times last year's earnings, compared with 16 for Hong Kong, 25 for India and 24 for Japan, according to data compiled by Bloomberg.

``The stock market is turning irrational,'' said Ren Yunhe, Shanghai-based analyst with Shenyin Wanguo Securities Co., who had a price target of 17.83 yuan, or about 20 times the company's earnings. ``I thought the target was very optimistic, but the result is even higher.''

Fund-Raising

Chalco, based in Beijing, issued 1.24 billion yuan- denominated shares to buy out shareholders of Shandong Aluminium Industry Co. and Lanzhou Aluminum Co. The Shanghai listing gives Chalco another way to raise funds as the company boosts output of aluminum, a metal used in beverage cans, aircraft and cars.

The market value of Chalco's shares, including those listed in Hong Kong, is 201.5 billion yuan ($26.2 billion), pushing it ahead of Baoshan Iron & Steel Co. as China's biggest publicly traded metal company, according to calculations by Bloomberg.

Chinese companies raised a record $51 billion selling shares this year. China Citic Bank Corp. shares almost doubled on their first day of trading in Shanghai on April 27 after the company raised $5.4 billion in Shanghai and Hong Kong, the world's biggest initial public offering this year.

Bank of Communications Ltd., China's sixth-biggest bank, attracted a record 1.45 trillion yuan of orders for its Shanghai share sale, greater than the market value of JPMorgan Chase & Co.

Reserves Order

China yesterday ordered banks to set aside more money as reserves for the seventh time in 11 months to try to prevent the economy from overheating. Economic growth accelerated to 11.1 percent in the first quarter from 10.4 percent in the previous three months.

The soaring stock market has prompted official warnings of a speculative bubble and illegal diversion of funds into shares. China's cabinet approved a special task force in February to clamp down on illegal securities activities.

The nation's securities regulator said today it will suspend intraday trading of stocks with large unexplained moves and increase scrutiny of information disclosure to control speculative and insider trading.

Chalco's full-year profit may fall 1.8 percent this year to 11.1 billion yuan ($1.4 billion), the company said April 16. That was higher than the 9.4 billion yuan consensus in a Bloomberg survey. Aluminum prices rose 3.6 percent in the past year, underperforming a 152 percent gain in nickel prices.

The company will produce 2.7 million tons of aluminum this year, Chairman Xiao Yaqing said March 12. That's up from 1.9 million tons last year. Output of alumina will be 10 million tons, up from 9.5 million tons. Aluminum is made from alumina, which is processed from bauxite.

Three-month aluminum futures traded little changed at $2,853 a ton in London today.

To contact the reporter for this story: Helen Yuan in Shanghai at hyuan@bloomberg.net

Last Updated: April 30, 2007 06:10 EDT