PetroChina shares more than double in Shanghai debut
Tuesday, 6 November 2007
SHANGHAI, Nov 5 (Reuters): Shares in PetroChina more than doubled in their market debut Monday after it raised $9.0 billion in the world's biggest initial public offering (IPO) this year, surging past analysts' expectations as crude prices neared US$100.
China's top oil producer became the world's biggest listed company by market value at around $1 trillion, double the capitalisation of the second biggest company, rival oil giant Exxon Mobil, at $488 billion.
Government-controlled PetroChina closed at 43.96 yuan in Shanghai, up 163 per cent from its IPO price and far above analysts' forecasts of around 35 yuan, underlining investor confidence in China's red-hot economy and PetroChina's status as its biggest oil and gas producer.
But the massive demand for PetroChina shares was partly due to wild speculation that has gripped China's stock market during a bull run that began last year, analysts said. That could hurt the stock and the overall market later on.
"The opening price is really too high as far as PetroChina's corporate fundamentals are concerned," said industry analyst Wang Jing at Orient Securities in Shanghai, adding that many investors were piling into the stock as a short-term trade rather than a long-term investment.
Analyst Dong Yong at Haitong Securities said surging global oil prices, which hit an all-time high above $96 a barrel in New York last week, were good news for PetroChina so far. Last week, Beijing hiked domestic fuel prices by up to 10 per cent.
"But in China, the oil sector is controlled by the state, and if Beijing chooses not to raise prices of oil products, high crude oil prices will actually become negative for PetroChina, which also has large refining operations," he said.
"So investors have been too optimistic in pricing PetroChina at such a high level on its debut."
PetroChina executives, investment bankers and brokers cheered at the Shanghai Stock Exchange as the stock's opening price of 48.60 yuan flashed on an electronic screen.
China's top oil producer became the world's biggest listed company by market value at around $1 trillion, double the capitalisation of the second biggest company, rival oil giant Exxon Mobil, at $488 billion.
Government-controlled PetroChina closed at 43.96 yuan in Shanghai, up 163 per cent from its IPO price and far above analysts' forecasts of around 35 yuan, underlining investor confidence in China's red-hot economy and PetroChina's status as its biggest oil and gas producer.
But the massive demand for PetroChina shares was partly due to wild speculation that has gripped China's stock market during a bull run that began last year, analysts said. That could hurt the stock and the overall market later on.
"The opening price is really too high as far as PetroChina's corporate fundamentals are concerned," said industry analyst Wang Jing at Orient Securities in Shanghai, adding that many investors were piling into the stock as a short-term trade rather than a long-term investment.
Analyst Dong Yong at Haitong Securities said surging global oil prices, which hit an all-time high above $96 a barrel in New York last week, were good news for PetroChina so far. Last week, Beijing hiked domestic fuel prices by up to 10 per cent.
"But in China, the oil sector is controlled by the state, and if Beijing chooses not to raise prices of oil products, high crude oil prices will actually become negative for PetroChina, which also has large refining operations," he said.
"So investors have been too optimistic in pricing PetroChina at such a high level on its debut."
PetroChina executives, investment bankers and brokers cheered at the Shanghai Stock Exchange as the stock's opening price of 48.60 yuan flashed on an electronic screen.