UPDATE 2-China's ShangPharma shares fall in debut

* Shares close at $12.75, 15 pct below IPO price

* ShangPharma sold 5.8 mln shares for $15 each in IPO

* Shares trading on NYSE under symbol "SHP" (Updates with closing price, analyst commentary, byline)

By Clare Baldwin

NEW YORK, Oct 19 (Reuters) - Shares of ShangPharma Corp (SHP.N) fell in their market debut on Tuesday as investors shied away from a company whose connection to China's strong economic growth was not direct, and who sold when the stock failed to show immediate gains.

Shares of the Shanghai-based R&D outsourcing company opened flat with their $15 initial public offering price, then fell, closing 15 percent below their IPO price in their debut on the New York Stock Exchange.

Investors recently have been looking to Chinese companies as a bright spot in an otherwise bleak U.S. IPO market because of their low costs and strong growth prospects. Four of the five top-performing offerings of the past 12 months in the United States are Chinese companies, according to Connecticut-based IPO research house Renaissance Capital. [ID:nN01273833]

But most of the Chinese companies with strong showings have been plays on the growth of China's economy, and ShangPharma was more a play on an outsourcing trend among pharmaceutical companies, said Renaissance analyst Nick Einhorn.

"It didn't have the big China macro trend in its favor," Einhorn said, adding: "If the yuan were to appreciate it could squeeze its margins significantly."

Currency tensions between the United States and China have been building ahead of a Group of 20 summit in Seoul, Korea next month.[ID:nN19117796]

ShangPharma sells chemistry and biology services to help customers discover and develop new drugs. Its two largest customers are Eli Lilly and Co (LLY.N) and GlaxoSmithKline PLC (GSK.L), which, respectively, accounted for 20 percent and 9 percent of revenue in the six months ended June 30.

In the first half of the year ShangPharma posted a net profit attributable to ordinary shareholders of $5.1 million on net revenue of $41.6 million.

ShangPharma on Monday sold 5.8 million American Depositary Shares for $15 each, raising $87 million. It had planned to sell shares for $14.50 to $16.50 each.

Underwriters on the IPO were led by Citi and JPMorgan. The shares are trading on the New York Stock Exchange under the symbol "SHP." (Reporting by Clare Baldwin, additional reporting by Rodrigo Campos; Editing by Gary Hill)