All the newly-listed REITs - five in Shanghai and four in Shenzhen - opened higher on Monday, but their performance varied hugely, as investors bet on potential land price gains in industrial park projects, but showed tepid interest in highway assets.

The biggest REIT gainers were the Bosera CMSK Industrial Park fund and the AVIC Shougang Biomass fund, which both jumped as much as 20%.

By contrast, the PingAn Guangzhou-Heyuan Expressway Fund only rose 1% in morning trade.

"New types of investment products often attract eyeballs and become the target of stir-frying (speculation) in China," said Cai Hongfei, analyst at Hong Kong-based brokerage Central Wealth.

China is launching a public REITs market to channel private money into infrastructure projects https://www.reuters.com/article/china-reits-subscription-idUSL2N2NI14X, ranging from toll ways to sewage plants, to ease debt burdens on local governments. REITs trade like stocks but offer stable cash dividends like bonds.

But limited supply of the instruments initially and a sense of novelty are attracting retail interest in REITs, typically favoured by long-term, institutional investors.

China's REITs market will likely witness high volatility over the next few months before sentiment calms down, added Cai.

The Shanghai Securities News, a local newspaper, advised investors to be rational.

"REITs investors should not dream of becoming rich overnight," the state media said in a commentary.

"You should not stir-fry REITs as newly-listed stocks, and should avoid herd investing."

TOP GAINER

The Bosera CMSK Industrial Park fund rose to 2.67 yuan ($0.4127) by midday, 16% higher than its offer price of 2.31 yuan, giving the REITs a 15% premium over the value of its underlying assets.

Central Wealth's Cai said the jump in the fund partly reflected investor bets that land prices in the Shenzhen industrial park will rise, generating capital gains in addition to stable rental incomes.

China is only allowing REITs to invest in infrastructure projects, in contrast to markets in Hong Kong, Singapore, and United States, where they can also invest in shopping malls and office buildings.

A broader China REITs market that eventually covers commercial properties could reach over $3 trillion, according to a Goldman Sachs estimate - surpassing the United States as the world's largest.

($1 = 6.4689 Chinese yuan)

(Reporting by Samuel Shen, Luoyan Liu and Andrew Galbraith; Editing by Himani Sarkar and Ana Nicolaci da Costa)