Since its IPO in Shanghai, the wild downtrend of PetroChina (601111) has not only given rise to a question of how its investors will suffer loss, but also become an issue that will probably direct the movement of A shares, concern all investors and even bring a bull market to an untimely end.
Impacts of PetroChina
From a pricing point of view, an IPO price of RMB16.7 was relatively fair and, according to media, even intended to favor investors, compared with its HK issue price of RMB1.27 set after complicated considerations. But we might never know “in whose favor in fact" until it opened at RMB48.6 on the first day of trading. Therefore, a question arises: Should all people not have an opportunity to benefit from the issuance of these state-owned shares rather than heavyweight institutions only? At least it should have been a fair play and not that the price of RMB1.27 was for Warren Buffett and Li Ka-shing and for small investors on the Mainland was RMB48.8. As it was, a disaster drew near when the stock opened at RMB48.8: The Shanghai Composite Index declined 14 percent, or 790 points, in the following days. However, that was just the beginning, and after PetroChina priced at RMB38.82 was included into the Shanghai index, indeed the market saw its nightmare come true.