Social networking company YY Inc on Wednesday became the first Chinese company in eight months to list stock on a US exchange, with a closing price that indicated investors were pleased.

Guangzhou-based YY, which operates an online platform for games, music, education and conferencing, ended its first day of trading on the Nasdaq Global Market in New York at $11.31 per American depositary share, or ADS.

Wednesday's close was 7.7 percent above the price of $10.50 per ADS that the company had set for its initial public offering shortly before trading got underway. That was at the low end of a price range - $12.50 being the high - that the company forecast earlier.

After starting flat, the shares traded as high as $11.75.

In filings with the US Securities and Exchange Commission, YY said it intended to sell 7.8 million ADSs, which at $10.50 each would raise $81.9 million. Each ADR represents 20 shares of the company's stock.

Founder and CEO Li Xue-ling said the IPO move "broke the ice" for Chinese companies on US exchanges.

"This decision is simply something that followed our 'five-year plan'," he told China Daily.

YY generated revenue of $88 million during the first nine months of this year, more than double the amount in the same period of 2011. China's No 2 gaming website has about 400 million registered users and an 84 percent share of the domestic market for audio conferencing, according to Chinese firm iResearch. The company makes money from advertisements and the sale of virtual items to users.

"YY's IPO represents the individual company's business need; however, it cannot change the current situation in the US stock markets for both tech companies and the slower pace of Chinese firms listing there," said Cao Di, an iResearch analyst.

"If YY's performance is good after it's listed, this at least sends a positive signal to overseas investors about the value of such Chinese companies."

Li, a former editor for Chinese news portal Netease.com, founded YY in 2005. The Chinese edition of Fortune magazine ranked him 16th among the 40 most accomplished Chinese CEOs under age 40.

The young entrepreneur has tried to make YY a standout in China's thriving Internet industry, which is dominated by the likes of Ma Yun, head of e-commerce leader Alibaba Group, and Li Yanhong, who runs search-engine giant Baidu Inc.

"YY was an early game-changer in the online gaming community in China," Li said. "It's now focused on different functions besides being a game portal. Music, for example, is where we try to drive more users with applications in producing, performing and sharing music."

YY's IPO comes at a time when tech companies, including giant Facebook Inc, which listed on Nasdaq in May, face investor skepticism over valuations. As Li suggested, the launch also breaks a long period in which Chinese companies haven't listed on US bourses, in the wake of scandals over accounting and alleged misstatement of assets.

There were over 30 Chinese IPOs in the United States in 2010, a long way from the three - including YY's - so far this year. In March, online retailer Vipshop Holdings Ltd, also based in Guangzhou, listed on the New York Stock Exchange, followed in April by Acquity Group Ltd, an e-commerce and digital-marketing company.

"To really revive the interest of US investors in Chinese listings, substantial deals, in terms of business size and scope, need to list in the US," said Josef Schuster, president of IPOX Schuster, an IPO research and investment firm in Chicago.

According to Li, some consultants involved in its IPO registration with the SEC also suggested that YY postpone the offering until the environment improved. But the CEO has confidence in the US market, saying the "temporary" chill wouldn't deter his company.

"A good company with solid performance will gain recognition at any time and in any place. We need to have our own business plan and form a long-term vision," he said.

Schuster said it's an "opportunistic" move for YY to list now.

"I think their bankers see a window given that the performance of one of this year's only Chinese IPOs, Vipshop, has been encouraging and that Facebook has seen its stock rally substantially since earnings, which may lift interest in the social media sector in general," he said.

As for performance, small size and revenue mean YY is likely to be a volatile stock that trades in the "high beta" category, Schuster predicted.

"Many Chinese IPOs see the trading volume post-IPO drop substantially, which increases liquidity risk and impacts institutional interest," he added.

YY also wants to gain international recognition, like many other Chinese companies, said Zhao Bin, chief technology officer. "It can definitely help our company expand our business plans overseas, something an innovation-driven company like YY needs," Zhao said.

Wednesday's IPO may have warmed things a bit and a slight uptick in Chinese listings in the US could ensue, but the "foreseeable future" will remain tough for such IPOs, Schuster said.

"The main interest of US investors is and will be on deals domiciled in the US and active in the US market," he added. "Those Chinese deals that will list will need to come at a discount."

yuweizhang@chinadailyusa.com