PetroChina becomes world's largest listed company

[shan]

XINHUA



Jiang Jiemin, chairman of PetroChina, hits the gong during a ceremony to mark PetroChina's listing in the trading hall of the Shanghai Stock Exchange November 5, 2007. [Agencies] 

SHANGHAI - Shares in PetroChina Company Limited, China's largest oil and gas producer, opened Monday at 48.6 yuan on their first day of trade in the mainland A share market, up 191 percent from their IPO price of 16.7 yuan.


The price made PetroChina the world's largest listed company by market capitalization. The previous biggest, Exxon Mobil, was valued at US$ 487.7 billion  according to last Friday's share price.

"Returning to the mainland's capital market has been our long-cherished wish," said Jiang Jiemin, president of PetroChina's parent China National Petroleum Corporation (CNPC), "the mainland offering will give domestic investors opportunities to share the outcome of PetroChina's fast growth and help expand the company's business in the mainland," he added.

The share price dropped to 43.65 yuan at the end of morning session with the bench mark Shanghai Component Index dipping 1.42 percent to 5695.57 points as the offerings of the oil giant have incurred concerns of strained funds and wobbles in the stock market.

Many institutional investors said the opening price had reached their upper expectation value.

By A-share listing, the company wanted to increase the crude oil production to match its refining capacity, said Zheng Yi, an analyst with Guangfa Securities.

PetroChina raised 66.8 billion yuan (US$8.9 billion) in Shanghai by selling 4 billion A shares, or 2.18 percent of its expanded share capital, in the world's biggest initial public offer (IPO) so far this year.

According to the company's prospectus, it will use 6.84 billion yuan and 5.93 billion yuan respectively to boost production capacity at its Changqing and Daqing oil fields. A total of 1.5 billion yuan will be used to build production facilities at Jidong field, the country's largest.

It also planned to invest 17.5 billion yuan to upgrade its Dushanzi oil refinery and ethylene facilities and six billion yuan in expanding an ethylene plant in Daqing, in northeast China.

Apart from the 4 billion A-shares issued in the public offering, the CNPC holds the rest of the 158 billion A shares, 86.29 percent of the total. It has 21 billion H Shares.

The PetroChina IPO surpassed the 66.58 billion yuan (US$8.88 billion) achieved by China Shenhua Energy Company, the country's largest coal producer, earlier last month.

On news of the large listing, China's major stock index dropped 2.31 percent on November 2, also the last trading day before the opening of PetroChina in the mainland A share market.

Chinese shares even slumped nearly 5 percent on October 25, the same day as subscriptions for PetroChina A shares began.

The company is the first of the country's three petrochemical giants including Sinopec and the China National Offshore Oil Corp. (CNOOC) to get listed on overseas stock market.

PetroChina began trading in Hong Kong and its American Depository Receipts were listed on the New York Stock Exchange in 2000. Its Hong Kong share price was 19.60 HK dollars last Friday.

Citic Securities Co., UBS Securities Co. and China International Capital Corp. are the main underwriters of the issue.

[shan]

China's main stock index fell more than two percent Monday as PetroChina became the world's largest company by market value after its mainland debut.


Jiang Jiemin, chairman of PetroChina, hits the gong during a ceremony to mark PetroChina's listing in the trading hall of the Shanghai Stock Exchange November 5, 2007. [Agencies]

The Shanghai Composite Index dropped 2.48 percent to close at 5,634.45 points, while the smaller Shenzhen Composite Index shed 0.68 percent to 1,377.19 points. The CSI 300 Index covering major companies in the two bourses fell 2.06 percent to 5,360.30.

The sell-out came as initial public offering (IPO) shares of PetroChina started trading in Shanghai. The country's biggest oil company opened at 48.60 yuan, nearly tripling the issue price of 16.70 yuan, before easing slightly to end the session at 43.96 yuan.

That closing price helped the company become the world's first company to be valued at $1 trillion, larger than the combined value of Exxon Mobil Corp. and General Electric Co, according to Bloomberg News.

"The mainland offering will give domestic investors opportunities to share the outcome of PetroChina's fast growth and help expand the company's business in the mainland," said Jiang Jiemin, president of PetroChina's parent China National Petroleum Corporation (CNPC).

In contrast with PetroChina's spectacular performance, Asia's largest refiner Sinopec plunged 8.88 percent to close at 25.96 yuan per share, bringing down the Shanghai Composite Index by 44 points.

Some institutional investors are dumping Sinopec shares to buy into its major rival, analysts explained.

Another factor affecting the market is Premier Wen Jiabao's pledge to prevent asset bubbles.

The government will take measures to prevent asset bubbles and avoid huge fluctuations in the stock market, Wen said during a visit to Uzbekistan. It is the government's responsibility to ensure a fair, healthy and transparent stock market, he said.

Wen's remarks prompted panic selling in the real estate shares. China Vanke tumbled 8.04 percent to 35.90 yuan.

Also dragging down the market is a notice from the China Securities Regulatory Commission, urging fund companies to avoid blind expansion and forbidding them to mislead consumers in marketing or engage in speculative investment.

Financial shares were weak, as the Industrial and Commercial Bank of China fell 4.28 percent to 8.28 yuan, followed by a 3.83 percent drop in China Construction Bank to 10.80 yuan.