PetroChina's share price reacted positively to the placement of $18.98 billion worth of shares after strong demand allowed the oil and gas producer to price the offer at the top of the indicated price range.
The shares closed 0.79 per cent higher at $6.35 after hitting an intraday high of $6.45 in active trade.
Market participants said investors were relieved the long-rumoured share sale had finally happened, removing part of the supply overhang that had dampened the share price in recent weeks. Some investors were caught a bit short of the stock after heavy short selling in the past week, with many opting to cover their positions immediately, one trader said.
Morgan Stanley upgraded its recommendation on the stock to 'overweight', citing the removal of the overhang and a possibility that PetroChina's weighting in the Morgan Stanley Capital International China index could increase to 13.8 per cent from 11.7 per cent as a result of the new share issue. It kept its price target at $7.10.
The share offer - amounting to 15.25 per cent of the enlarged H-share capital - was priced at $6 per share, a 4.76 per cent discount to Tuesday's closing price of $6.30. But because the shares were sold without the right to a dividend of about 15 cents, the actual discount worked out to be only 2.4 per cent.
PetroChina sold 2.87 billion shares, raising $17.26 billion that it intends to use for business development, including acquisitions, according to a company statement. In addition, parent, China National Petroleum Corp, sold 287.71 million existing shares to meet its obligations to the state pension fund.
