The robust debut reflects voracious demand for China-related stocks, as investors, many of whom received far fewer IPO shares than they had sought, shrugged-off the Hong Kong market's sharp drop on Monday and what several observers consider to be a sky-high valuation to buy up Alibaba.com shares.

Shares in Alibaba.com, in which US Internet giant Yahoo is a key investor, traded as high as HK$32.00 (S$6) early in the Tuesday session, compared with an IPO price of HK$13.50, which was at the top of an indicated range after the company's share sale drew record demand from Hong Kong retail investors.

The stock stabilised at about HK$30.00 early on Tuesday, up 122 per cent on the IPO price.

'I'm not convinced,' said Andrew Clarke, a trader at Societe Generale Securities in Hong Kong. 'It's massively overpriced. I'd rather go buy Exxon at 15 times earnings. At least it's got a decent management and a proper business.'

In grey market trade on Monday afternoon, Alibaba.com had ended nearly 88 per cent higher, according to Phillip Securities.

Chinese search engine Baidu.com trades at 170 times 2007 forecast earnings, while Google is at 46 times and eBay at 23.5 times. Trade media company Global Sources trades at 47 times, while Hong Kong-listed Tencent Holdings Ltd trades at 83 times prospective earnings.

Alibaba.com sold 858.9 million shares in its IPO, or 17 per cent of its enlarged share capital, in a deal handled by Deutsche Bank, Goldman Sachs and Morgan Stanley.

The company generated orders worth HK$447.5 billion from Hong Kong retail investors alone, making it the most popular IPO ever in the city, surpassing share sales by Industrial and Commercial Bank of China and Belle International.

Yahoo holds a 1.2 per cent stake in Alibaba.com, as well as a 39 per cent stake in Alibaba.com's parent firm, which holds 75 per cent of the listing company.

Alibaba.com, a business-to-business marketplace, was founded in 1999 by entrepreneur Jack Ma, and its initial public offering has been anticipated by investors for several years.

Other investors in the IPO included Cisco Systems and Taiwan's Hon Hai Precision Industry Co. The high level of oversubscription means many investors were disappointed with their share allocations.

With more than 162 million Web users, China is the world's second-largest Internet market after the United States. -- REUTERS