Huge appetite for Chinese dam shares

The new reservoir which has flooded many towns

A share offer in China's controversial Three Gorges Dam project has been almost 70 times oversubscribed.

Despite overseas concern about the giant dam's environmental impact, Chinese investors rushed to apply for Monday's $1.19bn Initial Public Offering (IPO) by Yangtze Electric Power, the company funding the massive hydroelectric project.

The enthusiasm shown towards China's largest float of 2003, has been fuelled by the fact the country's electricity consumption is rising 16% annually, and current supply is failing to keep up with the demand.

When fully completed by 2009, the dam will generate more than 80 billion kWh of electricity a year.

The first of its 26 generators went online back in July.

Hot topic

Analysts believe Yangtze Electric Power stock will climb between 40 and 60% on its debut in the coming weeks.

The dam will provide 10% of China's electricity needs

David Yip, analyst at Merrill Lynch, said: "China energy stocks are a hot topic, not only domestically but internationally as well. Power shortages are the best thing for power producers."

While retail investors tried to buy nearly 70 times the number of shares on sale, subscription levels from institutional investors, who are being offered 45% of the float, were not published.

The Yangtze Electric Power IPO is the fourth-largest ever in China, following after oil giant Sinopec, mobile carrier China Unicom, and China Merchants Bank.

One investor, 34-year-old Jian from Shanghai, said, "I'm investing because I've lost hope in most stocks at the moment. This is a new opportunity and I want to take advantage of it."

Resettlement

After 10 years of construction the 300m high dam has meant 600,000 people having to be resettled due to whole areas beside the Yangtze river in central China being flooded as the reservoir started to fill up.

Whole towns disappeared under the water.

Despite this human impact, the Chinese authorities say the dam will stop the devastating - and all too frequent - Yangtze river floods.

The largest hydroelectric project the world has ever seen, the resulting 365 mile-long reservoir will be visible from space, and the scheme will produce 10% of China's entire electricity needs.