PetroChina Becomes World's Biggest Company

PetroChina, Asia's largest oil and gas producer, becomes the world's first company worth more than $1 trillion, after going public. Its stock now trades on the Shanghai Stock Exchange. It surpasses U.S.-based ExxonMobil as the world's biggest company.

PetroChina sold 4 billion shares and raised $8.9 billion. That's China's largest initial public offering to date. But all those shares account for just 2 percent of PetroChina's stocks, which are also traded in Hong Kong and New York. Most of the shares — 85 percent — are held by the China National Petroleum Corp., PetroChina's state-owned parent company.

Most observers had expected a strong IPO, given Chinese investors' hunger for new listings, and China's thirst for energy. And PetroChina celebrated the fact that its total market capitalization was more than a trillion dollars, compared with ExxonMobil's $488 billion. But PetroChina's turnover and profits lag well behind those of Exxon Mobil.

Analysts also point out that a lot of today's buying was driven by short term speculators. They note that PetroChina's share price is more than 50 times its projected 2007 earnings per share. And PetroChina has been losing money on its refining operations, caught between rising global oil prices, and Chinese government price controls.

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