PetroChina now the world’s largest company

Last week, PetroChina became the first company in the world to be valued at more than US$1 trillion after its first day of trading on the Shanghai stock market, where hungry investors clamored for the stock which nearly tripled the share price.

The oil and gas company shattered two records by raising a record US$9bn in October: it registered the world's biggest IPO this year and China's largest domestic IPO ever. PetroChina's market capitalisation overtook the combined market caps of Exxon Mobil and General Electric, and is thus a prime example of both China's inevitable economic rise and perhaps a sign of an ominous bubble in its equity markets.

Analysts have been warning investors for the past few months that the Chinese mainland market valuations are in the midst of a speculative bubble due to booming economy and the massive liquidity that is stuck in China.

Hong Kong share prices, while experiencing a steady rise since August, trade at a significant discount to its mainland counterparts.

Chinese markets have been attracting significant interest from institutional and retail investors over the past two years, as share prices have increased more than five times. PetroChina attracted more than US$456bn in subscriptions. Mainland China's stock market is valued at US$4.5 trillion, placing it within striking distance of Japan, but still a long way behind the US. On the market-cap measure, China is now home to five of the world's 10 biggest companies.

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