SECURITIES - Chinese firm tops $1 trillion - It's a world milestone as PetroChina shares begin trading in Shanghai.
SHANGHAI — PetroChina Co. became the world's first company valued at more than a trillion dollars Monday, catapulting over U.S. energy titan Exxon Mobil Corp. as eager Chinese got their first shot at investing in the oil giant when its stock began trading on the Shanghai exchange.
Shares of PetroChina nearly tripled as investors scrambled to get in on the offering. The stock opened at the equivalent of $2.24 and traded as high as $6.52 before closing at $5.90.
That price, plus the value of shares traded on the New York and Hong Kong exchanges and those held by the company's government-controlled parent, gave PetroChina a total market value of $1.1 trillion -- more than double Exxon Mobil, at $486 billion.
But most of PetroChina's stock remains in the hands of state-owned China National Petroleum Corp., and analysts cautioned that Monday's $1.1-trillion valuation isn't directly comparable to the market values of Western companies that are owned entirely by private investors.
Still, the stock sale by China's largest energy producer was a milestone in the dramatic rise of the nation's companies and markets -- and a powerful sign of the hunger of mainland Chinese to invest their new-found wealth.
"The problem with the Chinese stock market is a shortage of supply. It's a major issue," said Andy Xie, an independent economist in Shanghai, who noted that the Chinese government retained ownership of major assets such as land and natural resources.
"With household income rising at double-digit rates, there's only so much you can put into bank deposits."
Monday's IPO raised $8.9 billion, making it the largest ever for China's mainland market. There have been several multibillion-dollar offerings this year, including China Shenhua Energy and China Construction Bank.
Today, China's leading e-commerce site, alibaba.com, is expected to raise $1.5 billion when it debuts on the Hong Kong exchange. It is the first major Asian technology company to snub the U.S. Nasdaq market for its primary stock offering.
Many prominent American financial gurus have warned that China's stock market is a bubble that will end badly. The Shanghai market is up more than 100% this year, and major companies have outsized valuations compared with their American counterparts.
Former Federal Reserve Chairman Alan Greenspan expressed concern last spring about runaway Chinese share prices and warned of a "dramatic correction."
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