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China:The return of PetroChina

PetroChina, the oil company with the title “the most profitable enterprise in Asia”, finally returned to the stock market of mainland China (A-market) 7 years after its overseas exchange in New York and Hong Kong since 2000. People called it “the return of the king”, a landmark of the flourishing financial market of China.

On 5th, November, PetroChina debuted on the A-market. Before that, it had all but drained the market capital because nearly 3.3 trillion RMB swarmed to bid for the share. PetroChina soon hit the price of RMB48.60/share with its total market capitalization reaching over $1 trillion, nearly the 1/4 of the whole market. This IPO brought PetroChina the greatest market value in the world, surpassing the total amount of Mobil and General Electric that followed it. Moreover, it’s also a one-hundred-percent success of the state-owned company itself, which raised a record-breaking US$8.9 billion from the listing.

Experts suggested this giant would definitely further affected China stock market, which since 2006 has entered the age of bull market. The flourishing market has attracted millions more of Chinese people into the fanatic wealth-pursuit game. The number of stock investors might be over 80 million. Now, every stock holder in China can feel the uncertainty of the market’s next step since the index has reached its very high point after a year’s surging. Therefore, the IPO of the giant at the time invited numerous discussions.

Blogger Shuipi(水皮)felt pessimistic with PetroChina’s future performance and warned:

就目前市场这种言必称中石油的狂热,就3.3万亿资金打中石油新股的疯 狂,就人人都恨不得割肉去炒中石油的神经,中石油的股票等你能买上的时候,一定是套你的时候,或许中石油的开盘价就是最高价。

The market is now crazy about the PetroChina. Everyone talks about PetroChina;3.3 trillion RMB competed for PetroChina; people can't help but sell themselves to buy the share —— the day you manage to buy its share is the day you get bogged. Maybe the initial price is the highest price it can have.

Mengsheng(萌生)‘s comment has a touch of worry

蓝筹泡沫的破裂也是早晚的事,A股市场的平均市盈率70倍是难以支持接近6000点位置,只有下跌了风险降低了投资价值才能日益显现,再进一步的说下跌也是讲个方式的,不象某些评论家或者经济界的权威人士那样,动不动A股市场要崩溃了如何,这都是些极端的说法,再者说了管理层也不愿意看到这种情况,这就是一个度的问题了,回落到4000点完全是一个正常的股市阶段性调整,完了之后再继续牛市之路有何不可,罗马不是一天建成的

The bubble of blue chip is sure to break, later or sooner. The P/E ratio that is over 70 can hardly support the index nearly 6000. Not until the index fall can the real value of the stocks be seen and the risk be lowered. However, the index won’t fall in a way of crash so extremely as some predicted. The men in authority are not willing to see so, either. To go back to 4000 is absolutely acceptable as a periodic adjustment. And why not resuming the bull market again after that? Rome was not built in a day.

Xue Hanbo(薛汉波) thought those so-called experts are scratching their heads about the future as well:

有些股评专家认为中国的股票不算贵,认为 中国股市不存在泡沫(或者说泡沫不严重),他们认为不能用正常的经济规律和财务分析来评判中国的股市,因为中国的股市具有中国特色,所以外国的专家是预测 不准的,好像世界上的经济学家对中国股市的分析和判断都是错误的,都是对中国有敌意的。他们可是市场经济的推动者,为什么到了关键时刻却又否认了市场经济 的正常规律。

Some experts suggested the shares in China are not expensive and there is no bubble (or not serious). They think people can’t employ the normal economics and financial methods to analyze Chinese economy because it has “Chinese characteristic”. It seems that all other foreign economists make the wrong judgments and have enmity. Though they impel the market economy, they deny the rule of it.

Besides the uncertainty shrouding the market, another focus is on that whether PetroChina is worth its great value on the paper and how it can maintain the prosperity. Is it gaining the wealth fairly?

Here is an excerption from Wikipedia:

“Although PetroChina is the most profitable company in Asia, this success is not the result of corporate management, but due to its duopoly on the wholesale and retail business of oil products with Sinopec in China.”

There is the same kind of voice from Chinese. Huashan Kanhai(华山看海)said:

中国石油的业绩靠的是中国大众的消费,油价的提升带动股价的提升,以得到自己市值炫耀,可悲!热钱进入,赚走谁的钱,中国股民? 巴菲特跑了,散户还这么不冷静.可见中石油不仅是虎,而且是个带有狐狸心机的漂亮的母虎.

PetroChina gained its profit by the benefit from Chinese citizens’ mass consumption and the rising oil price, so that it can flaunt the market value. Sigh! The hot money flowing into China has earned so much. From who? Chinese stock-holders ! Buffett has run away. Why don’t those retail investors calm down? PetroChina is not only a tiger but also a foxy and charming female tiger.

A netizen thought there is a conspiracy behind:

回想当年,我们看到有那么多股民被上市公司玩弄于掌股之上,痛苦挣扎在没有诚信,市盈率高企的国内股市。哪一只股票不是高溢价发行!在这痛苦的时候,我国的决策者们却将大批优质国企,甚至具有战略地位的垄断国企的股票(如中石油),以净资产价(1.28港元)卖给外国人。就我所知,当时凡是知道的中国股民无不痛心疾首,徒唤奈何!现在这种卖国,将使我国经济成长的成果长期持续大量瓜分外流,人民不能合理获得劳动财富,享受改革成果。这也是社会越来越不和谐的重要原因之一。这些决策者和主流经济学家们是国家的罪人.

For so many years many Chinese investors are toyed with by listed companies. No credibility, high P/E ratio and high premium. Though we have been being afflicted by these, the country nevertheless sold high-quality state-owned companies OVERSEAS, including PetroChina, the monopoly with strategic position. It is sold at the price of net assets (HKD 1.28) to the foreigners. As far as I know, every domestic investor is heart-struck then. The quislism like this makes our fruit of development outflow. That’s one of the reasons we can reach harmony——people can’t really enjoy the fruit of their effort. …… those who made decisions and those “main-stream” economists are criminals of our country!

Fu Yong(傅勇) kept a sense of crisis:

目前,埃克森美孚营业收入是中石油的四倍,而利润率只有中石油的1/2;显然,我们很难将中石油的这种盈利优势归结为其竞争力的体现。垄断通常与低效率相伴随,中石油在服务质量、社会形象、定价机制上尚有很多不尽如人意的地方。中石油“市值第一”的名号应该激起高度警觉和担忧,而不是弹冠相庆!

Presently, the Mobil earned 4 times more than PetroChina……we can’t attribute PetroChina’s advantage to its competence. ……monopoly comes with low efficiency. It has still more to improve on service, social reputation and price-deciding mechanism. The title “greatest market value” should bring us alert and anxiety, not a celebration!

The discussions around the “lord of the market” will go on. Up till now, PetroChina has finished its first week in A-market. After the high point of its debut, price of PetroChina immediately fell until Wednesday at 40 RMB. Then, it had a transient ascending, but soon fell again. Finally, it stayed at RMB38.18 on Friday, about 80 % of its initial price.

Where is and how is the future of Chinese financial market? Millions of investors are attentively staring at the computer screens and waiting anxiously for the next Monday. Can PetroChina give the answer?

1 comment

  • 塘沽张三

    泡沫破碎日,黄梁梦醒时。

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