PetroChina, the oil and gas company, became the world’s first enterprise to be valued at more than $1 trillion (£480 billion) when Chinese investors rushed to buy its shares on their debut yesterday.

Bankers and brokers cheered when the opening price of 48.60 yuan flashed up on a screen at the Shanghai stock exchange, almost tripling the value of the 4 billion shares listed at 16.70 yuan each.

However, the surge that transformed PetroChina into the world’s most valuable company — double the market capitalisation of its nearest rival, Exxon Mobil, the American oil giant — was as much a warning of a developing Chinese market bubble as a reflection of investor demand.

The shares closed the day up 163 per cent at 43.96 yuan, about 55 times earnings per share — far above the average of 18 times for oil companies globally — but still below an average of about 80 times for other China-listed oil and gas stocks.

Exxon Mobil, by contrast, trades at about 13 times earnings.

PetroChina is far less profitable than its rival. First-half results showed PetroChina’s net profit at $10.9 billion compared with $19.5 billion for Exxon Mobil.

Wang Jing, an analyst at Orient Securities in Shanghai, said: “The opening price is really too high as far as PetroChina’s corporate fundamentals are concerned.”

Only 13 per cent of the company, already listed in Hong Kong and New York, has been floated.

The remainder is held by the state-owned parent, China National Petroleum, and is unlikely to be traded in the near future.

In addition to investor fever for more shares, demand was also fuelled by surging global oil prices, which hit a record high above $96 a barrel last week.

A few days ago, China raised domestic fuel prices by up to 10 per cent to ease the burden on PetroChina, which cannot pass on the higher crude costs because of government price controls at the pumps.

The euphoria over the Shanghai listing prompted a warning from Wen Jiabao, the Premier.

He said: “The Government will take measures to prevent asset bubbles and avoid huge fluctuations in the stock market.”

The Shanghai market lost 2.5 per cent yesterday, but is still up about 110 per cent this year and no one is expecting the bubble to burst just yet.

A lack of investment opportunities for domestic savers put off by interest rates running below inflation, and eagerness for a stake in China’s burgeoning economy are expected to hold up prices for some time.

At PetroChina’s initial listing in Hong Kong and New York this year, the demand for shares amounted to $456 billion a sum greater than the gross domestic product of Belgium.

However, international investors viewed the listing as overpriced and sent PetroChina’s Hong Kong-listed shares tumbling 8.2 per cent to HK$18 and leaving the Shanghai A shares at a 154 per cent premium to the Hong Kong H stocks.

The benchmark Hang Seng index slid 5 per cent, to close at 28,942.32 after a weekend remark by Mr Wen that hinted at an effective freeze on plans to allow mainland Chinese to invest in Hong Kong.

The index has climbed 40 per cent since the scheme was announced in August.

However, Mr Wen said that Beijing wanted more time to consider the likely impact of such a policy on Hong Kong and Chinese markets as well as a law to regulate the outflow of money from the mainland.

Those factors could take the shine off the trading debut today in Hong Kong of Chinese business-to-business internet marketplace Alibaba.com.

It is set to raise $HK11.6 billion (£718 million) from the offering, the world’s biggest internet stock IPO since Google raised $1.67 billion in August, 2004.

Slick operation

4bn

New PetroChina shares listed in Shanghai

$1,000bn

PetroChina’s market capitalisation

$488bn

Exxon Mobil’s market capitalisation

$9.41bn

Exxon Mobil’s third-quarter profit

$10.8bn

PetroChina’s first-half profit

22.7bn

Exxon Mobil’s oil and gas reserves in barrels

20.5bn

PetroChina’s oil and gas reserves in barrels

Source: Times archives

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