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shanghaiceltic
Board Royalty
Joined: Sep 20, 2005
Posts: 7619
Location: Perth WA
Status: Offline
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 Posted:
Nov 06, 2007 - 12:14 PM |
 
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| Post subject: PetroChina shares |
Did anyone buy shares?
The trouble I see with shares in China is the state control of companies issuing them. These ones have rocketed but is that mostly a feeding frenzy?
The recent increase in fuel prices here might have helped, but the petro companies here stop producing certain grades of fuel (90 and diesal) when the oil prices rises and the govt will not authorize an increase in fuel prices.
PetroChina debuts as world's biggest company
By Mark Kleinman in Hong Kong and Sophie Brodie
Last Updated: 1:36am GMT 06/11/2007
China's biggest company, the state-owned oil giant PetroChina, has become the largest in the world and the first to exceed $1trillion (£500bn) in value after its shares almost trebled on their first day of trading in Shanghai.
The milestone, which saw PetroChina surpass Exxon Mobil, the US oil company, adds another notch to the belt of corporate China as it flexes its muscles on the global stage.
PetroChina, which was already listed in Hong Kong and New York, raised almost $9bn from the Shanghai listing of four billion shares (2.2pc of the total number) and saw its shares close 163pc higher on the day. The share offering was the world's largest so far this year.
Warren Buffett, the legendary US investor, recently sold his stake in the company, turning a $3.5bn profit on an investment made in 2003.
Despite its soaring share price, PetroChina has struggled as a business to boost production from oilfields and been hampered by state-controlled oil prices. The funds from the Shanghai listing will be used to finance five projects in oil output and refining.
PetroChina reported that its first-half net profit rose 1.4pc on the previous year to $10.8 billion.
In contrast to the PetroChina frenzy on the mainland, Hong Kong's blue-chip share index today posted its biggest one-day fall since the September 11 terrorist attacks amid scepticism over China's intentions towards a scheme to allow offshore investments by Chinese investors.
The Hang Seng Index slumped 5pc to 28,942.32 points following comments by the Chinese Premier, Wen Jiabao, that more "scientific" analysis needed to be conducted before a so-called stocks 'through-train' programme allowing Chinese citizens to plough money into Hong Kong shares could be implemented.
Confirmation of the delay to the scheme, which was announced in September, reflects the nervousness among Chinese politicians about the possible effects of a flood of money leaving China for overseas destinations.
Despite the fall in the Hang Seng, the Hong Kong index remains among the world's best-performing so far this year, buoyed by strong corporate profit growth and the general health of Asian economies. |
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Kiwi
Post Boaster
Joined: May 07, 2003
Posts: 4763
Status: Offline
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Nov 06, 2007 - 04:11 PM |
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I think PetroChina is now trading at around 60 times earnings, compared to 16 times for Exxon Mobil.
Warren Buffet just sold out.
That's all you need to know. Of course it's a feeding frenzy!
And the proposal for Mainlanders to be allowed to buy HK shares (but not other foreign shares) is the kind of stupid scheme that will kill HK as a credible international financial center. Of course that just may be Beijing's long term goal anyway. |
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tomnoddy_uk
Fire-eater
Joined: Mar 14, 2006
Posts: 2912
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Nov 06, 2007 - 04:32 PM |
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China will be the same as any other emerging market.
share in Taiwan/korea's shares traded at 90, 100 xs at peak.
there's still a tonne of liquidity out there.
having said that, whilst it will go higher, there's a fair chance it will correct first. |
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"Eight minutes past the hour here in Belgium - and presumably eight minutes past the hour everywhere in the world." Murray Walker |
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hc
Post Roaster
Joined: Apr 04, 2007
Posts: 4545
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Nov 06, 2007 - 04:39 PM |
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lalaabc321
Veejay
Joined: Dec 07, 2004
Posts: 2002
Status: Offline
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Nov 06, 2007 - 05:42 PM |
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| Kiwi wrote: |
I think PetroChina is now trading at around 60 times earnings, compared to 16 times for Exxon Mobil.
Warren Buffet just sold out.
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because buying petrochina is indirectly supporting Sudan in killing their own people
good excuse as most of people used on here |
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Kiwi
Post Boaster
Joined: May 07, 2003
Posts: 4763
Status: Offline
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Nov 06, 2007 - 06:24 PM |
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Hopefully Wen Jiabao will can it rather than delay it.
OK, I'm not up to date on this thing, but I did some reading on it a few months back when they first started talking about it.
Some reasons this scheme is bad news:
1 - The idea has been sold by the HK government like it is some kind of favor being granted by Beijing that will boost the HK market. Say the scheme does go ahead as proposed, Mainland money pours into HK, and prices increase there, all that is happening is that HK is importing Mainland China's asset bubble. From the perspective of the international investors that HK currently services HK just becomes a riskier market and they go elsewhere. HK just becomes another China and loses its appeal. So the HK government is selling the scheme on very weak grounds - as bringing short term benefits but surely with long term problems.
2 - Receiving this type of 'favor' from Beijing just distracts the HK government from doing what it should be doing, passing legislation to improve the international competitiveness of the HK market - i.e. by regulating to protect investor rights (i.e. allow investors to take class action suits against companies that disregard investor interests, improving efficiency by bringing in scripless trading, tightening auditing requirements, etc.). These are the type of things HK should be doing to remain a credible international financial center, and if it can't maintain that status what future does it have?
3 - Can the scheme even actually work? I mean either it is a very limited scheme with tons of restrictions which mean it will have hardly any effect (making the recent anticipatory run up in HK stocks destabilizing, and damaging the credibility of the HK market without even offering benefits of temporarily inflated prices). Alternatively it is a very complete scheme, which means it is likely to not only burst the bubble in the Mainland market, but take HK with it too.
4 - The HK government has been suggesting that this scheme would be introduced alongside a mechanism allowing the HK and Mainland governments (though designated financial institutions on each side - Bank of China and the Hong Kong Monetary Authority) to arbitrage to exploit price differences between the two markets. This proposal is kind of bizarre. . . It gets a bit technical to explain well (don't have my head round it myself), but I think either the respective organizations on the HK and CH sides actually buy and sell shares in the respective markets to do the arbitrage, or they are given the (sole) right to shunt shares back and forth (i.e. convert A shares in dual CH/HK listed companies into H shares and vice versa). The first option can't work because it would mean borrowing shares to short them in the higher priced (i.e. Chinese) market, and China doesn't allow shorting. Unless they suddenly introduce shorting it has to be the second option. But the second option would basically amount to making the RMB freely convertible. They could implement it in different ways, but basically it would either burst the mainland bubble or see dual listed shares disappear from the HK market as people transferred them into Mainland shares. Neither outcome seems very good.
I guess what it all comes down too is that the bubble in China is so big that singling HK out as the sold 'foreign' destination for this excess liquidity = bad news for HK. Beijing may be hoping this could be a way of quietly deflating the bubble in the Mainland, but the solution threatens to contaminate Hong Kong. The Hong Kong government seem keen on the idea since they see it as a type of 'patronage' from Beijing, but surely this is patronage of a rather dangerous kind?
I think the government of a city that wants to remain an international financial center should be disassociating itself from a plan like this rather than rushing into it.
OK, well that's a messy post but you probably get the general idea. |
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leidelaohu
Wonder Wit
Joined: June 11, 2007
Posts: 3781
Status: Offline
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| Posted:
Nov 06, 2007 - 06:36 PM |
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| Kiwi wrote: |
| OK, well that's a messy post but you probably get the general idea. |
Gotta put a star on the calendar, have to agree with you on this. The whole thing is just so much hot air ... PetroChina is a company, ha ! Let's start selling shares in California then. Ridiculous. |
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ShanghaiUnderground
StreetBeater
Joined: July 15, 2004
Posts: 2413
Location: Shanghai
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Nov 06, 2007 - 10:23 PM |
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You can buy 'shares' in California, actually. Municipal bonds. |
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lalaabc321
Veejay
Joined: Dec 07, 2004
Posts: 2002
Status: Offline
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Nov 07, 2007 - 09:06 AM |
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something other countries stop doing many years ago |
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sinkin my fingertips into every inch of you |
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currychook
Rocker
Joined: Dec 21, 2005
Posts: 602
Location: Hong Kou, Shanghai
Status: Offline
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| Posted:
Nov 07, 2007 - 01:39 PM |
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yup, this asset bubble is worrying. When your local masseuse is talkiing about buying stocks- you know its time to pull out. Right now, everyone is feeling rich and paying stupid prices. |
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