BEIJING -- Hong Kong's Hang Seng Index rose 1.7% Friday to close at 15,913, while the Shanghai Composite Index slid 0.9% to 1669.

In New York trading Thursday, China technology shares were mostly gainers, while commodities plays sagged. Amid a Nasdaq rally,

Sohu

(SOHU) - Get Report

gained 2% to $25.42;

Netease

(NTES) - Get Report

rose 1% to $20.63; and

Baidu

(BIDU) - Get Report

advanced 7.2% to $83.43.

Sinopec

(SNP) - Get Report

fell 3.8% to $58.10 and

PetroChina

(PTR) - Get Report

was off 2% to $106.45.

In the wake of yesterday's

barnburner Bank of China listing in Hong Kong, mainland exchanges in China are at last preparing to reopen IPO markets closed for the past year.

According to local press reports, CAMC Engineering Co. will end the IPO moratorium on June 5 by debuting on the Shenzhen Exchange, which mainly includes small- and medium-sized companies. Yesterday the company priced its shares at 7.4 yuan per share, or roughly 93 cents.

Beijing had put a moratorium on listings amid ongoing share reforms at state-run companies. IPOs will resume amid a backdrop of soaring stock prices: year to date, the benchmark Shanghai Composite Index has shot up an astonishing 44%.

The market's outperformance marks a welcome reversal from a four-year slump that ended last year. But investors have voiced some concern about the sudden run-up in values, which might affect valuations for new listings.

"Long term, we certainly welcome the reopening of the IPO market," said Lewis Leung, Beijing-based head of international business at Harvest Fund Management, a joint venture with Deutsche Asset Management. But he added: "It depends at the end of the day on what value the market assigns the new stocks. If it becomes too crazy, we won't be able to participate in those issues."

Last year the Chinese government suspended IPOs when it began requiring state-run listed companies to convert their previously nontradable shares into tradable shares.

Previously, two thirds of equity had been held in non-tradable shares by the state, creating a share overhang that weighed on the market.

The share reform, which is expected to be completed by the end of this year, will subject Chinese-listed companies to the full glare of market scrutiny. Investors hope the shift will goad Chinese-listed companies into being more responsive to their concerns by upgrading standards of corporate governance and management.

Beijing's decision to begin allowing IPOs again largely reflects that "there's a lot of pressure from companies that need the financing," says Neil Juggins, Shanghai-based head of research for Evolution Securities. The IPO moratorium "is obviously driving companies to list overseas."

The Hong Kong bourse has become the preferred listing venue for ambitious mainland Chinese companies, in part because it can attract investors with higher listing standards and far-greater liquidity than domestic exchanges.

But with the mainland markets at last seeing an upswing, domestic companies may see more value in listing at home as well as in Hong Kong.

Paradoxically, even as China's GDP has surged along at 9% annual growth rates for the past two decades, its stock markets lost roughly half their value between 2001 and the summer of 2005. Last year, the Shanghai Composite Index qualified as Asia's worst performer, down 8.3% for the year.

But equities started to turn around in the fourth quarter of 2005, launching a rally that shows no signs of flagging yet.

"On a relative basis, if you compare China with regional markets, especially India and also Korea and Japan, the Chinese market has been lagging for a long time and other regional markets have seen a bull market for the past two to three years. So certainly this is just a V-shaped rebound, catching up with regional markets," said Leung. "In the long run we're certainly bullish on China and we believe this is just the beginning of a secular bull market."

For now, the equity markets in Shanghai and Shenzhen remain off limits to U.S. individual investors.

For that matter, many foreign fund managers still tread gingerly in mainland China. Of more than 1,000 issues that trade on the better-known Shanghai Exchange, only a small portion are considered to be relatively liquid, high-quality names. Institutional investors have cited concerns over lax bookkeeping and a general lack of transparency for companies listed on the mainland exchanges.

There's hope that share reforms will usher in improvements on both fronts.