Shanghai - PetroChina became the world's largest company by market value on Monday, worth about one trillion dollars - double the value of ExxonMobil - as its shares surged in their debut on the Chinese mainland.
The milestone underlined the ongoing boom on Chinese markets, which have been flooded with ready cash brought by hungry investors who have disregarded warnings that the China bubble is destined to burst eventually.
Asia's top oil and gas producer already traded in Hong Kong and New York, but PetroChina's new shares made their debut on Monday on the Shanghai bourse after the largest initial public offering ever on the Chinese mainland.
The shares, priced at 16.7 yuan for the IPO, touched a high of 48.62 yuan ($6.5) shortly after the market's opening, an increase of 191% that valued the firm at about $600bn more than ExxonMobil.
Its shares closed at 43.96 yuan - still up 163%, but in Hong Kong a broader market slide left PetroChina down 6.63% to 18.30 Hong Kong dollars (US$2.44) at mid-day.
PetroChina's market capitalisation shot past the $1.1 trillion mark in early trade before broader market losses of 2.48% in Shanghai prompted a retreat to about $1 trillion.
In terms of earnings, however, PetroChina does not even make it into the top 50 companies of the world, raising a red flag both about the valuation of the firm and the overall sustainability of the Chinese stock boom.
"Stock prices are rising too fast," said Yi Linming, Shanghai-based analyst with Industrial Securities.
PetroChina's share price skyrocketed despite a warning from Premier Wen Jiabao that the Chinese government would adopt the necessary policies to rein in the sizzling stock market.
"The government will take measures to prevent asset bubbles and avoid huge fluctuations in the stock market," Wen told reporters, according to the China Daily website.
"It is the government's responsibility to ensure a fair, healthy and transparent stock market," he was quoted as saying.
The key Shanghai index surged 130% last year and is up nearly 120% so far this year. Many companies are trading up to 60 times earnings, much higher than many shares on other international bourses.
Zhu Zhiyong, analyst with Golden Sun Securities based in Shanghai, said investors had chased the firm's price too high.
"I think it's a bit risky for individual investors to buy in at the moment because we don't see much growing space," Zhu said.
Wu Feng, an analyst at TX Investment Consulting Co, said a more "reasonable" valuation for PetroChina shares was around 35 yuan. "Its opening price exceeded our estimates," he said.
Despite the massive surge in PetroChina shares on Monday, the Chinese state will maintain a firm hand in the company, controlling an 86% stake via parent China National Petroleum Corporation.
Regulators have encouraged strong Chinese firms to list on home markets in the hope they can improve the quality of listed companies and deflate stock prices which have risen too fast.
"Through these listings, the intention of the government to try to control the market is quite clear," Guo Feng, an analyst with Northeast Securities based in Shanghai, said ahead of Monday's opening.
The IPO of PetroChina, which raised nearly $9bn in its sale of four billion shares, is the world's biggest this year and the largest in mainland China's history.
- AP