Only in China: PetroChina Shanghai Listing Adds $30 Billion Market Cap

Amazing. I mentioned last Wednesday in Chinese Oil is Flying, and that PetroChina (PTR) will be listing on the Shanghai (domestic) market. That exchange is basically the plaything of mainland Chinese investors and no one else really gets access - hence the valuations there are very out of whack with the rest of the world.

Well, today the news is out that PetroChina won regulatory approval (shocker!) and more amazing is what that is 'worth' - this is a $300 Billion market cap company and it is up 10% premarket. So simply by listing on Shanghai in addition to its current listings in Hong Kong/New York and flooding the market with new shares (4 BILLION) i.e. dilution to earnings per share (so they can raise money to explore more) that is worth +$30 Billion. I used to say "only in America" but I guess now we can say "only in China".

This is not like the dot com days - this is in some ways worse. I can't recall anything similar pushing a stock up of this size. Back then, stocks used to go up 20% on news of a stock split, another non-starter (you get twice the shares for half the price) or 30% if you decided you were going to compete with Ebay in auction or Yahoo/Excite/Lycos in search - even if you had no expertise. As long as you mentioned you were gunning for them, your stock rocketed.

Essentially, the world markets have valued PetroChina at Z and a simple notification of listing in Shanghai means the company is now worth Z x 1.10. Classic.

Comments

[LJ:]

This speculation appears to be triggered outside China rather than inside China. Those who ramped up the share price in the pre-market should be blamed.

The company is state-owned, but the mainland investors could not buy the stock at lower valuation. Should this stock be listed in China in the first place, the mainland investors wouldn't end up in such a disadvantaged position.

2007 Sep 24 12:46 PM