PetroChina now world's largest firm by market cap

05 November 2007 03:57  [Source: ICIS news]

By Florence Tan

SINGAPORE (ICIS news)--Chinese energy major PetroChina overtook ExxonMobil as the world’s largest firm by market capitalisation on Monday after its shares nearly tripled in value on their debut in Shanghai.

PetroChina’s market value reached around $1,000bn, more than double the US major’s $488bn. It is also listed in Hong Kong and New York.

Its share price soared to yuan (CNY) 48.60 ($6.5) on Monday’s open from its initial public offering (IPO) price of CNY16.70, but fell to CNY43.95 later in the morning.

The strong share price reflected local investors’ confidence in PetroChina, Grace Liu, an analyst at Guotai Jun’an Securities, said.

“Its (PetroChina’s) listing in Shanghai will also provide the company another funding platform,” she said in Mandarin.

CFC Seymour analyst Wu Guoliang said even though PetroChina was not as mature a company as ExxonMobil, it has unparalleled leadership in China which was difficult for overseas companies to gain access.

 

He added that the company would use its proceeds to streamline its portfolio and to fund acquisitions overseas.

The company raised nearly $9bn in the country’s largest IPO to date and planned to spend CNY37.8bn of the proceeds to expand its crude oil, refining and petrochemical production. More than half of this will be spent on building a refinery and two crackers.

However, its Hong Kong share price fell 5.8% to Hong Kong dollar (HK$) 18.46 ($2.4) after local media reports that the Chinese government might delay a plan to allow mainland investors to invest in Hong Kong.

Chinese vice-premier Wen Jiabao said Beijing should pass a law to regulate outward mainland fund flows to minimise the shock to local bourses, and look at how this might affect the Hong Kong stock market.

Price gaps between the Hong Kong and Shanghai stock markets were common among companies listed in both bourses, Liu said, adding the phenomenon was expected to last for some time following Wen’s comments.

($1=CNY7.46/HK$7.76)

By: Florence Tan
+65 6780 4359

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