Chinese oil giant CNOOC rises in Shanghai debut and defies weak market – Metro US
Chinese oil giant CNOOC rises in Shanghai debut and defies weak market – Metro US

Chinese oil giant CNOOC rises in Shanghai debut and defies weak market – Metro US

SHANGHAI (Reuters) – Chinese oil giant CNOOC Ltd rose as much as 44% in its Shanghai debut on Thursday, after raising 28.08 billion yuan ($ 4.41 billion) in China’s 11th largest public offering.

The stock began trading on the Shanghai Stock Exchange at 12.96 yuan, 20% higher than the offer price of 10.8 yuan.

Trading in the oil giant was suspended by the stock market after the stock hit the upper limit of the daily allowable price band for new listings, citing abnormal fluctuations that defied a weak market where China’s blue-chip index fell 0.5%.

CNOOC’s Hong Kong-listed stock rose as much as 4.3% before cutting gains.

“CNOOC is being chased by investors seeking shelter in large companies with relatively low valuations and high dividends,” said Linus Yip, chief strategist at First Shanghai Group. “The stock also whets the market’s appetite at a time when oil prices are rising and inflation is accelerating.”

China’s largest offshore oil producer, CNOOC, has said it would use the proceeds from the sale of shares to finance a gas and seven oil field projects in China and abroad and to rebuild capital.

“CNOOC represents historic investment opportunities due to high oil prices, low valuation and consistently high dividends,” Chen Shuxian, an analyst at Cinda Securities, wrote on Thursday, adding that CNOOC’s market value has the potential to double over the next few years.

CNOOC begins trading in Shanghai against the backdrop of a gloomy stock market that has witnessed an increasing number of stocks falling below IPOs.

One-third of the roughly 100 companies recently listed this year in Shanghai and Shenzhen fell below bargain prices on debut, data from East Money Information showed. Some, including chipmaker Vanchip Tianjin Technology Co., Ltd. and electronics company Rigol Technologies Co., Ltd., fell more than 30%.

Such a debut performance – in stark contrast to the first-day pop that once appeared in China’s stock markets – reflects the outcome of listing reforms as well as a bearish investor sentiment.

China’s tough COVID-19 containment measures at a time of increased geopolitical risk are also shaking its stock markets, sending the primary benchmark stock index down 18% so far in 2022.

The sale in Shanghai came after CNOOC was delisted in October by the New York Stock Exchange, after the U.S. government added the company to a trading blacklist citing alleged links to China’s military.

State-subsidized peers PetroChina Co Ltd and China Petroleum & Chemical Corp (Sinopec) are already listed in Shanghai.

(Reporting by Jason Xue, Samuel Shen and Andrew Galbraith; Editing by Muralikumar Anantharaman and Christopher Cushing)

Leave a Reply

Your email address will not be published.