MILAN, Apr 21 (Class Editori) — CNOOC made a record-breaking debut in Shanghai. Today the Chinese oil giant’s shares increased by 44% to 15.55 yuan in its debut on the Shanghai Stock Exchange, in contrast to general market weakness, as investors saw the company as an opportunity amid high energy prices and rising inflation. The stock started the session at 12.96 yuan, with a value 20% higher than the placement price of 10.8 yuan, but the Shanghai Stock Exchange almost immediately imposed a 30-minute trading halt when the price reached the upper limit of the range allowed for new listings. The stock then closed trading with a 27.7% increase at 13.79 yuan.
"CNOOC attracts investors seeking refuge in big caps with relatively low valuation and high dividends," Linus Yip, Chief Strategist at First Shanghai Group, stated. "The stock is also boosting market appetite at a time in which oil prices are rising and inflation is accelerating". China's largest offshore oil producer raised 28.08 billion yuan —4.41 billion dollars— in the country's 11th-largest public offering of shares. The company anticipated that it is going to use the proceeds to replenish capital and fund projects related to a gas field and seven oil fields both in China and abroad.
"CNOOC represents historic investment opportunities due to high oil prices, low valuation and consistent dividend yields," Chen Shuxian, Analyst at Cinda Securities, stated, adding that the company's market capitalization could double in the coming years. The share began trading against the backdrop of a gloomy stock market, which has seen an increasing number of shares fall below IPO prices. According to data from East Money Information, a third of the 100 or so companies newly listed on the Shanghai and Shenzhen exchanges this year have fallen below their debut offer prices. Some, including chip maker Vanchip Tianjin Technology and electronics company Rigol Technologies, plummeted by more than 30%.
Such disappointing performances since debut, in stark contrast to the rallies once seen in Chinese markets, are the result of IPO reforms and bearish investor sentiment. In addition, China's harsh Covid-19 containment measures, at a time of rising geopolitical risk, are rattling equities. Yang Hongxun, Analyst at investment advisory firm Shandong Shenguang, noted that many of the stocks collapsing on debut are small caps with high valuations, while CNOOC is modestly priced.
CNOOC's Shanghai offering will enter the top 10 largest listings in China if the greenshoe option is fully exercised. Its debut in Shanghai comes after it was delisted from the New York Stock Exchange (NYSE) in October following the US government's decision to blacklist the company due to suspected ties to the Chinese military. CNOOC stated it operated in accordance with local laws. State-owned companies PetroChina and China Petroleum & Chemical Corporation (Sinopec) are already listed in Shanghai.
(Source:Class Editori)
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