PetroChina collapse has no end in sight

Ten years after it peaked on first day of trading in Shanghai, state-owned energy major has lost $800b in market value

It’s going to take more than the biggest stock slump in world history to convince analysts that PetroChina Co. has finally hit bottom.

Ten years after PetroChina peaked on its first day of trading in Shanghai, the stateowned energy producer has lost about $800 billion (Dh2.94 trillion) of market value — a sum large enough to buy every listed company in Italy, or circle the Earth 31 times with $100 bills. In current dollar terms, it’s the world’s biggestever wipeout of shareholder wealth. And it may only get worse. If the average analyst estimate compiled by Bloomberg proves right, PetroChina’s Shanghai shares will sink 16 per cent to an all-time low in the next 12 months.

Policy shifts

The stock has been pummeled by some of China’s biggest economic policy shifts of the past decade, including the government’s move away from a commodity-intensive development model and its attempts to clamp down on speculative manias of the sort that turned PetroChina into the world’s first trillion-dollar company in 2007.

Throw in oil’s 44 per cent drop over the last 10 years and Chinese President Xi Jinping’s ambitious plans to promote electric vehicles, and it’s easy to see why analysts are still bearish. It doesn’t help that PetroChina shares trade at 36 times estimated 12-month earnings, a 53 per cent premium versus global peers.

Toshihiko Takamoto, a Singapore-based money manager at Asset Management One, said: “Why would anyone want to buy the stock when it’s trading for more than 30 times earnings?”

Of course, many of the factors behind PetroChina’s slump have been outside the company’s control. When it listed in Shanghai in 2007, bubbles in both oil and the Chinese equity market were primed to burst, while the global financial crisis was just around the corner. Measured against the 73 per cent drop in China’s CSI 300 Energy Index over the past decade, PetroChina’s 82 per cent retreat doesn’t look quite so bad.