BEIJING — The state-controlled firm PetroChina toppled Exxon Mobil from its perch Monday as the world's most highly valued company as eager Chinese investors briefly pushed its value to $1.1 trillion.
Analysts said the landmark event underscored China's growth and the hunger of cash-laden savers to invest in China's stock markets despite warnings of a bubble.
PetroChina's capitalization rocketed to $1.1 trillion early Monday when its shares began selling on the Shanghai A-share market, later retreating to a value of about $980 billion. The mainland debut gave domestic investors their first crack at buying into the company, whose value has climbed fifteen-fold since it went public in Hong Kong and New York in 2000.
The soaring opening day gave PetroChina a value higher than that of Exxon Mobil and General Electric combined.
"I feel very excited today and also feel a very strong sense of responsibility," PetroChina Chairman Jiang Jiemin said at the Shanghai Stock Exchange, where he rang the opening gong. "The mainland offering will give domestic investors opportunities to share the outcome of PetroChina's fast growth and help expand the company's business."
Stockholders have pushed five Chinese firms into the ranks of the world's top 10 companies in recent weeks.
Several foreign economists and investment gurus say, however, that China's stock markets, which soared 130 percent last year and has risen about 110 percent so far this year, may be ready for a tumble.
But some analysts said PetroChina's soaring capitalization reflects genuine growth prospects, combined with a glut of excess capital sloshing around China's markets looking to be mopped up, rather than mere frothy speculation.
"It's overly pessimistic to say at this point that it's a bubble and it'll all come to grief," said Tim Condon, head of Asia research at ING Financial Markets in Singapore. He noted that while valuations are moving "very high," new companies are coming on the market and China's leaders are addressing rampant speculation.
According to the China Daily Web site, Premier Wen Jiabao said Beijing "will take measures to prevent asset bubbles and avoid huge fluctuations in the stock market."
Some domestic analysts note that Chinese investors have few options for their money other than the sizzling stock market.
"It's hard for them to buy stocks in Hong Kong or other countries, so the only things to do are to put savings in the bank or buy stocks from A-share companies and real estate companies. But now the interest rate is lower than the inflation rate, meaning putting your money in the bank is actually losing money. People see the best way is to buy stocks," said Wang Dong, chief analyst at Industrial Securities in Beijing.
In terms of earnings, PetroChina doesn't even rank among the top 50 companies worldwide. Its valuation is now four times higher than Exxon Mobil, the Irving, Texas-based company which has revenue four times greater.
But PetroChina has large oil and gas reserves, and considerable growth potential. Last year, it held 20.5 billion barrels of oil and gas reserves, compared with Exxon's 22.1 billion barrels and Royal Dutch Shell's 11.3 billion barrels.
Berkshire Hathaway, the company controlled by billionaire investor Warren Buffett, sold its holdings of PetroChina earlier this year for an eightfold gain. Buffett said Oct. 24 during a trip to Dalian, China, that share prices here have risen too fast and that "it's easy to be carried away in the stock market when things are going very well."
Comments