Buying domestic shares of China's newly public companies at their original prices has been a sure way to make money this year.

　　The 18 stocks sold for the first time in China this year rose an average of 69 percent with none gaining less than 23 percent. The United States, a market 28 times bigger, has had the same number of new sales. The Bloomberg IPO Index, which tracks US stocks during their first year of trading, added 10 percent.

　　The China sales include seven of the 20 best-performing initial public offerings worldwide, such as Shaanxi Aerospace Power High Tech Co, a maker of pumps and meters whose price has tripled.

　　The gains reflect an unwritten rule at China's securities regulator: IPOs are normally priced at no more than 20 times historical earnings, or about half the average on the benchmark index. By ensuring stocks rise, it is easy to sell US billion of shares it owns in publicly traded companies, some investors said.

　　A track record of success may help the government unload stakes to fund pension payments in a nation//where//200 million people are retired.

　　China's newly public companies usually have the biggest gains on the first day of trading, the only day when a stock's price moves aren't subject to a 10 percent daily limit. Shares have rallied by an average of 88 percent on their first trading day in 2003, and more than doubled in the previous three years.

　　Initial share sales require approval from the China Securities Regulatory Commis-sion. The commission has never published an official document about the price-earnings rule, said spokeswoman Zhou Xuan.

　　"Good companies should be allowed to price shares higher," said Liu Yang, who helps manage US billion in Asia as a fund manager at Atlantis Investment Management in Hong Kong.

　　Shares of last year's 66 China IPOs rose by an average of 135 percent on their first trading day, only to slide 11 percent 90 days later. This year, IPOs dropped by an average of 8 percent since closing on their first trading day.

　　Stock prices bear little relationship to earnings, analysts said. Seven of the Chinese companies that sold shares for the first time this year said profit or sales fell last year.

　　Shaanxi Aerospace's profit declined 0.7 percent last year. Its shares are up 204 percent since they began trading on April 7, and are worth 61 times last year's earnings. At Citic Securities Co, the first brokerage in China to list through an initial offer, earnings fell 72 percent last year. Citic shares are up 82 percent since January.

　　Chinese stocks are expensive when compared with the shares of domestic companies traded in Hong Kong.

　　An index of Shanghai's yuan-denominated A shares, available only to local investors until last December, was recently valued at 44 times earnings. The Shenzhen index, which has half as many stocks on its exchange, traded at 85 times. The Hang Seng China-Affiliated Corporations Index, which tracks Hong Kong-listed companies, was only 10 times earnings.

　　Domestic shares are valued higher because residents, with US.1 trillion in personal savings, don't have many investment opportunities. The central bank has cut deposit rates seven times in six years, to 1.98 percent. The country's bond market offers only a handful of investment options.

　　The government now controls as much as 75 percent of the stocks in every publicly traded company. These stocks, usually priced at about 10 percent of market prices, cannot be traded on the stock exchanges and can only be bought and sold through auctions.

　　China said last year that it plans to sell the unlisted stocks by 2016, converting them//into//tradable shares on the exchanges.