Shares in PetroChina, which raised $9 billion in the world's biggest initial public offer this year, are set to double their price when they list in Shanghai on Monday, 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 are likely to close around 35 yuan on their first day of trade, up from their IPO price of 16.70 yuan, according to a Reuters survey of seven analysts.
Forecasts for the closing price range from 30 yuan to as high as 50 yuan.
A price of 35 yuan would give PetroChina a total market value of more than $800 billion, making it the world's largest listed company by market capitalization. The current biggest, Exxon Mobil, is valued at $510 billion.
The potential for China's oil industry is huge. PetroChina can expand at full capacity in the medium term, said Orient Securities' analyst Wang Jing.
PetroChina raised 66.8 billion yuan 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 previous record holder Shenhua Energy, which drew 2.7 trillion yuan with a Shanghai IPO in September, jumped nearly 90 percent in its Shanghai debut.
PetroChina is already listed in Hong Kong and the United States.
MASSIVE IPO DEMAND
Analysts said demand for PetroChina's offer was inflated by recent weakness in the Chinese stock market, which has increased demand for IPOs because investors view them as a surer bet than buying shares in the market.
And PetroChina looks certain to become the largest component in Chinese market indexes. With China expected soon to launch trade in stock index futures, institutions will want to own PetroChina to give them influence over the futures index.
The tiny size of the firm's 2.18 percent float in Shanghai, compared to the 11.53 percent float of its H shares in Hong Kong, will add to upward pressure on the A shares -- though this factor may eventually fade, since China plans to let its investors buy shares in Hong Kong.
But a major attraction for 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 over 5 percent in recent years.
PetroChina, and its smaller rivals Sinopec Corp and CNOOC, account for over 90 percent of China's crude oil and natural gas output.