* Bank of Chongqing also had lacklustre debut
* Soft tone for bank IPOs comes as other lenders eye listings
* But online game firm Boyaa surges in first day of trade
By Denny Thomas and Elzio Barreto
HONG KONG, Nov 12 (Reuters) - Shares in Huishang Bank Corp Ltd became the second China bank in just over a week to make a lacklustre Hong Kong debut, underscoring lukewarm investor appetite for the Chinese banking sector despite a likely raft of listings on their way.
The flat start for Huishang, which raised $1.2 billion in the island city's biggest bank IPO in three years, follows weak pricing for the offer, near the bottom of its marketing range.
The soft tone for bank listings comes as China Cinda Asset Management Co Ltd, the nation's biggest bad loan manager, began gauging investor interest for its up to $2 billion IPO this week. The offer is expected to be priced in the first week of December..
Also monitoring the debut are other Chinese lenders, including China Everbright Bank, Bank of Beijing and China Guangfa Bank, which are among companies seeking to raise about $11 billion through Hong Kong offerings over the next 8 to 10 months.
In morning trade, Huishang Bank shares were changing hands at HK$3.53, the same level at which the IPO was priced, after hitting a high of HK$3.58. That compares with a marketing range of HK$3.47 to HK$3.88.
Bank of Chongqing, the fellow Chinese provincial lender which listed last week, was also trading below its IPO price on Tuesday.
Some market participants said that of the two, Huishang, which is based in the booming industrial heartland of Anhui province, looks to be the better bet.
"It's fairly valued and is a better buy compared to recently listed Bank of Chongqing, which counts local governments as its key clients, said Jackson Wong, Tanrich Securities vice-president for equity sales.
"Huishang is less risky because its business is more retail-driven and it's one of the more recognizable banks in the central parts of China," he added.
With the mainland IPO markets shut down by regulators for more than a year, Chinese lenders are turning to Hong Kong to bolster their balance sheets as bad debts show signs of picking up in the world's second-biggest economy.
But the new offers have met with weak demand as investors tend to prefer listed peers with a known track record of performance.
At the IPO price, Huishang was valued at a forward price-to-book ratio of 0.95, compared with the average P/B of 1.18 for Hong Kong-listed banks, according to Thomson Reuters data.
To overcome the weak demand, underwriters have been selling more shares to cornerstone investors, who get guaranteed allocations in return for agreeing to lock up shares for a certain time. In Huishang's case, China Vanke Co Ltd committed to buy about $400 million in shares, to become its largest shareholder.
Huishang's debut contrasts with a flying start for Boyaa Interactive International Ltd, China's largest developer of online card and board games.
Boyaa, which raised about $127 million, shot up 30.3 percent, underscoring investor optimism over booming growth in the sector..
The company's offer was swamped by orders from small investors, with the retail portion generating more than 832 times demand than the shares on offer, a company filing said on Monday. The institutional tranche of the IPO was "very significantly over-subscribed."
Huishang hired BOC International, Citic Securities International , JPMorgan, Morgan Stanley and UBS AG as sponsors for the IPO.
It also tapped another 14 banks, including China International Capital Corp (CICC), Citigroup, Guotai Junan Securities and Nomura, to help manage the offering as joint bookrunners.