Shares of PetroChina Surge

Shares of China’s largest oil and gas producer, PetroChina, more than doubled in their first appearance in the market on Monday after raising $9 billion in the world's largest initial public offer this year.

PetroChina was established as a joint stock company with limited liabilities under the Company Law of the People's Republic of China (the PRC) on November 5, 1999 as part of the restructuring of CNPC.

The share became an immediate blockbuster and took PetroChina’s market value to around $1 trillion. The company thus surged past Exxon Mobil Corp, the world's second biggest company in terms of market value.

Chairman Jiang Jiemin said at the Shanghai Stock Exchange said, "I feel very excited today and also feel a very strong sense of responsibility. This is PetroChina returning to our investors and the society."

Shares in PetroChina leapt to 43.65 yuan in Shanghai by midday, up 161 percent from their IPO price. The rally makes PetroChina shares four times more expensive relative to earnings than those of Exxon.

Industry analyst Wang Jing at Orient Securities in Shanghai was circumspect of the success and attributed the demand of these shares to the wild speculation.

He apprehended that the Bull Run could hurt the stock as investors would not take to the stock in the long run. He said, “The opening price is really too high as far as PetroChina's corporate fundamentals are concerned."

Analyst Dong Yong at Haitong Securities echoed Wang’s opinion. He said, "In China, the oil sector is controlled by the state, and if Beijing chooses not to raise prices of oil products, high crude oil prices will actually become negative for PetroChina, which also has large refining operations. So investors have been too optimistic in pricing PetroChina at such a high level on its debut."

PetroChina, which raised $9 billion in Shanghai by selling 4 billion shares will use the proceeds for five domestic projects to expand oilfields and develop ethylene output, as well as to supplement working capital.

In the Hong Kong market, PetroChina was down 6.63 percent to 2.44 US dollars at mid-day. The company had floated shares in Hong Kong and New York in April 2000.