Shares in PetroChina, which raised $9 billion in the world's biggest initial public offer this year, nearly tripled in their market debut and far exceeded analysts' forecast, buoyed by the company's position in the world's second-biggest energy market.
Local-currency A shares in China's largest oil and gas producer opened at 48.60 yuan on Monday, compared with their initial public offer price of 16.70 yuan.
The shares had fallen back slightly to around 45 yuan nearly an hour after the start of trading. They had been expected to trade around 35 yuan, a Reuters poll of seven industry analysts showed.
The opening price gave PetroChina a total market value of $1.1 trillion, making it the world's largest listed company by market capitalization, more than double the second biggest, Exxon Mobil, at $488 billion.
The opening price is really too high as far as PetroChina's corporate fundamentals are concerned, said industry analyst Wang Jing at Orient Securities.
PetroChina raised 66.8 billion yuan ($9 billion) in Shanghai by selling 4 billion A shares, or 2.18 percent of its expanded share capital, in the world's biggest IPO this year, and the largest-ever IPO in China's domestic market.
The offer drew 3.4 trillion yuan of subscriptions from retail and institutional investors, the largest amount for any Chinese IPO. Shares in the previous record holder Shenhua Energy, which drew 2.7 trillion yuan with a Shanghai IPO in September, rose nearly 90 percent in their debut.
A major attraction for domestic investors is PetroChina's central role in supplying energy to the world's fastest-growing major economy. China's consumption of crude oil and oil products has risen at average annual rates of more than 5 percent in recent years.
PetroChina, and its smaller rivals Sinopec Corp and CNOOC, account for more than 90 percent of China's crude oil and natural gas output.
Analysts said PetroChina's higher-than-expected opening may in part reflect domestic investors' view that its A shares should be valued above Sinopec's.
PetroChina's opening price put its A shares at a 156 percent premium over its Hong Kong-listed H shares, slightly higher than Sinopec's 144 percent. Both are well above the average premium of 56 percent for all A shares of such dual-listed Chinese companies.
PetroChina's opening price valued it at 60 times analysts' forecasts for its 2007 earnings per share, above the average of 18 times for oil firms globally, but it is still below an average of about 80 times for more than a dozen oil and gas stocks in the Shanghai and Shenzhen markets, according to Reuters Estimates.
Local securities houses forecast a 20 percent rise in PetroChina's earnings for 2008 and 15 percent for 2009.
PetroChina first floated shares in Hong Kong and New York in April 2000, when China considered its domestic stock market to be at an experimental stage and preferred to push major companies to test the waters in global markets, while aiming to raise foreign exchange that its economy was still lacking at that time.