PetroChina’s Value Surpass Korea’s GDP

China’s largest oil and gas producer China National Petroleum Corporation (CNPC, PetroChina) has become the world’s biggest company based on market capitalization after being listed on the Shanghai Stock Exchange. China’s media was excited at the news and said, “China rewrote the history of the world’s stock markets.”

On First Day of Trading, Stock Price Tripled -

PetroChina’s IPO price on Monday was 16.7 yuan (about 2,027 won). As soon as trading began at 9:30 a.m., the price started rising and reached 48.62 yuan at around 9:42 a.m. At noon, it began dropping gradually and closed at 43.96 yuan (about 5,336 won).

PetroChina set the IPO price at 16.7 yuan considering that the share price it set in Hong Kong in April 2000 was 16 to 18 yuan. But it rose to a higher-than-expected 31.19 to 36.20 yuan. The steep rise led shareholders who participated in the IPO to garner profits 2.6 times more than the amount they invested.

PetroChina sold four billion shares, raising 66.8 billion yuan (about $8.92 billion). The total number of shares exceeds 183.02 billion. Subscription for its stocks raised a whopping 3.37 trillion yuan (about 409 trillion won), with those who actually were able to purchase at only 1.82 percent. With this, PetroChina has become China’s all-time biggest IPO and also the world’s largest one so far this year.

PetroChina is Worth Almost One Nation’s GDP -

With its share price skyrocketing, its market capitalization also jumped to 8.045 trillion yuan (about 976.65 trillion won or $1.078 trillion), and rose to the world’s largest listed company in one breath.

As of last Friday, it was valued at $460 billion, lagging behind Exxon Mobil which was valued at $487 billion, but it snatched the top position on the first day of trading with its market capitalization rising twice that of Exxon Mobil.

When compared to GDP, the value of the world’s largest oil and gas company in terms of market capitalization exceeds that of South Korea which last year ranked 12th in GDP ($888.26 billion), Russia which was 11th ($984.92 billion), and Brazil which ranked 10th ($1.067 trillion).

Five out of the 10 largest global companies in terms of market capitalization are Chinese. They include Commercial Bank of China (ICBC), China Petroleum & Chemical Corporation (Sinopec), and China Life Insurance Co. Three out of the 10 are American, and the remaining two comprise one Dutch and one Russian each.

But it is About Half as Profitable as its Rival -

Though PetroChina’s total market capitalization is the highest, its net profit in the first half of the year recorded $10.9 billion, which is half of Exxon Mobil’s net profit of $19.5 billion. In terms of total assets, with 1.39 trillion yuan, it ranks 39th among the 500 largest global companies.

In the meantime, its share price in Hong Kong was down 6.6 percent to 18.3 Hong Kong dollars (about 17.3 yuan). The figure is 39 percent of the share price traded in Shanghai. The gap shows that people in the world judge PetroChina differently from the Chinese, and that share prices in mainland China are exaggerated, according to experts.

orionha@donga.com