Chinese oil giant CNOOC surged 44% in its Shanghai debut on Thursday, after raising 28.08 billion yuan ($4.41 billion) in a public stock offering.
The shares began trading on the Shanghai Stock Exchange at 12.96 yuan, 20% higher than the offering price of 10.8 yuan.
Trading in the oil giant was suspended after hitting the upper limit of the daily allowable band for new listings, citing abnormal fluctuation, while Hong Kong-listed shares of CNOOC surged as much as 4.3% before paring gains.
“CNOOC is being chased by investors who are seeking shelters in big caps with relatively low valuation and high dividends,” Linus Yip, chief strategist at First Shanghai Group, said. “The stock also whets market appetite at a time when oil prices are climbing and inflation accelerating.”
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China’s largest offshore oil producer, CNOOC has said it would use the share sale proceeds to fund one gas and seven oilfield projects in China and overseas, and to replenish capital.
“CNOOC represents historic investment opportunities due to high oil prices, low valuation, and consistent high dividend yields,” Chen Shuxian, an analyst at Cinda Securities, wrote on Thursday, adding that the group‘s market cap has the potential to double over the next few years.
CNOOC starts trading in Shanghai against the backdrop of a bleak stock market that has witnessed an increasing number of stocks dipping below initial public offering (IPO) prices.
A third of the roughly 100 companies newly listed this year in Shanghai and Shenzhen dropped below offer prices on debut, data from East Money Information showed. Some, including chipmaker Vanchip Tianjin Technology and electronics firm Rigol Technologies, tumbled more than 30%.
Such debut performance – in sharp contrast with the first-day pop that once featured in China’s stock markets – reflects the result of IPO reforms, as well bearish investor sentiment.
China’s tough Covid-19 containment measures at a time of heightened geopolitical risk are also roiling its stock markets, sending the main benchmark stock index CSI300 down 18% so far in 2022.
The Shanghai sale came after CNOOC was delisted in October by the New York Stock Exchange after Washington added the firm to a trade blacklist citing suspected connections to the Chinese military.
State-backed rivals PetroChina and Sinopec are already listed in Shanghai.
- Reuters, with additional editing by George Russell
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