Chinese Oil Giant CNOOC Soars in Shanghai Debut, Challenges Weak Market

A woman wearing a face mask walks past a China National Offshore Oil Corp (CNOOC) sign in front of its headquarters in Beijing, China, March 8, 2021. REUTERS/Tingshu Wang

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SHANGHAI, April 21 (Reuters) – Shares of CNOOC Ltd jumped as much as 44% in their Shanghai debut on Thursday, defying broad market weakness as investors sought safety in the Chinese oil giant amid soaring prices. of energy and the acceleration of inflation.

After opening 20% ​​higher, CNOOC shares immediately soared 44% on the Shanghai Stock Exchange, hitting a high price for the day and causing a 30-minute trading halt. The stock ended the session up 27.7%.

It marked a bright spot in a gloomy Shanghai (.SSEC) market that plunged more than 2% amid COVID-19 lockdowns and geopolitical tensions.

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

China’s largest offshore oil producer raised 28.08 billion yuan ($4.41 billion) in the country’s 11th largest public offering of shares. He said he would use the proceeds to finance a gas project and seven oil fields in China and abroad, and to replenish capital.

The Shanghai listing “is a key milestone in the company’s history,” CNOOC Chairman Wang Dongjin said in a statement.

CNOOC will fully exploit both domestic and foreign financing channels to promote quality growth and create shareholder value, he added.

Chen Shuxian, an analyst at Cinda Securities, said in a note on Thursday that “CNOOC represents historic investment opportunities, thanks to high oil prices, low valuation and consistently high dividend yields,” adding that the market capitalization of the company has the potential to double. next years.

Hong Kong-listed shares of CNOOC rose as much as 4.3% in early trading, but later posted a loss of about 3%.

CNOOC goes public in Shanghai against the backdrop of a bearish stock market that has seen an increasing number of stocks fall below their initial public offering (IPO) prices.

A third of the roughly 100 companies listed this year in Shanghai and Shenzhen fell below their debut offering prices, data from East Money Information shows. Some, including chipmaker Vanchip Tianjin Technology Co Ltd (688153.SS) and electronics firm Rigol Technologies Co Ltd (688337.SS), fell more than 30%.

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

China’s stock markets are the second worst performers globally this year after sanctions imposed on Russia, as the economy grapples with COVID-19 outbreaks, the Ukraine crisis and US monetary tightening.

Yang Hongxun, an analyst at investment consultancy Shandong Shenguang, said many stocks that were deserted at the debut are small caps with high valuations, while CNOOC was modestly priced.

In its Shanghai offer, CNOOC shares were priced at 10.8 yuan, 23.88 times earnings or 1.05 times net assets.

The Shanghai sale came after CNOOC was delisted from the New York stock exchange in October after the US government added the company to a trade blacklist citing suspected connections to China’s military. CNOOC said it had operated in accordance with local laws.

State-backed peers PetroChina Co Ltd (601857.SS) and China Petroleum & Chemical Corp (Sinopec) (600028.SS) are already listed in Shanghai. read more

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Reporting by Jason Xue, Samuel Shen, and Andrew Galbraith; edited by Christopher Cushing and Jason Neely

Our standards: the Thomson Reuters Trust Principles.

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