* Weak market drags down shares
* Hang Seng Index drops 3 percent
* Silver Base to benefit from Chinese consumption
(Updates with closing price, adds details)
By Tony Munroe and Parvathy Ullatil
HONG KONG, April 8 (Reuters) - Chinese liquor and cigarette distributor Silver Base Group <0886.HK>, which raised $133 million in a popular Hong Kong IPO, fell 10 percent on its trading debut, failing to beat a tough day in the market.
Robust demand for shares in Silver Base and another recent newcomer from China had fuelled talk among investors, bankers and listing hopefuls that the long-moribund IPO market was finally showing signs of life.,
But a 3 percent drop in Hong Kong's Hang Seng Index <.HSI>, part of a global halt to a run-up in stocks as a potentially rough U.S. earnings season looms, served as a reminder that risk appetite remains fragile and demand for unproven names is skittish.
"Given the atmosphere today, it's hard to trade up the stock," said Jackson Wong, investment manager at Tanrich Securities, who expects Silver Base to benefit from rising domestic consumption in China.
"This is a good brand and retail story, so near-term prospects are pretty good," he said.
Export-reliant China is looking to bolster domestic consumption, and makers and sellers of retail goods are expected to benefit from Beijing's 4 trillion yuan ($586 billion) stimulus package, aimed at keeping economic growth at 8 percent or more.
DOWNSIZED DEAL, DISCOUNTED PRICING
Silver Base, which distributes products made by Chinese liquor maker Wuliangye Yibin <000858.SZ> as well as Dimple Scotch Whisky, had hoped to launch an offering worth as much as $300 million last year, but put those plans on hold when markets collapsed.
On Wednesday, shares in Silver Base closed at HK$3.11 each, never reaching their IPO price of $3.45, which had been at the top of an indicated range.
The IPO price valued Silver Base at 10.45 times the company's pro forma per-share earnings forecast of at least HK$0.33 each for the year just ended in March.
By comparison, Tsingtao Brewery <0168.HK><600600.SS>, China's best-known beer maker, trades at 27.4 times forecast 2008 earnings in Hong Kong.
Silver Base priced its IPO last week shortly after Chinese online gaming firm Changyou.com <CYOU.O> sold its $120 million Nasdaq IPO at the top of an indicated range on strong oversubscription. Shares in Changyou.com trade 40 percent above their IPO price.
Both Silver Base and Changyou.com's IPOs have encouraged other Chinese firms to dust off their own IPO plans.
"Every CEO in our IPO pipeline has been calling, saying: 'I want to be next'," said a senior equity capital markets banker in Hong Kong who declined to be identified.
But IPOs can require long lead times to execute and not every issuer is ready, the banker said.
Markets, meanwhile, need a prolonged period of stability and companies need to be willing to price their deals attractively in order for new issuance to pick up, bankers and investors said.
For story on the global IPO outlook, click [ID:nN07530167].
Globally, IPO volumes are down 96 percent so far this year, according to Thomson Reuters data.
