PetroChina, Asia's most profitable listed company, saw its market value swell by as much as 8.24 per cent yesterday after announcing a share sale worth 45.77 billion yuan that is expected to be one of the mainland's largest offers.
PetroChina is the latest Hong Kong-listed mainland firm unveiling a plan to return to the domestic market amid increasing pressure from Beijing to increase the supply of quality firms to tame raging speculations.
Mainland-incorporated H-share firms, such as China Construction Bank Corp, China Telecom Corp, China Oilfield Services, China Shenhua Energy and Great Wall Motor, and Hong Kong-incorporated red chips China Mobile, Lenovo Group, CNOOC, Citic Pacific and China Netcom Group Corp all have similar plans.
Red chips have been in a rally since it emerged last week that China Mobile may be the first among them to return to the mainland market as early as August with an 80 billion yuan offering.
Investors also snapped up H shares that are believed to be selling A shares on expectations that the companies will benefit from higher valuations in the mainland market.
The Shanghai Composite Index rose 162.5 per cent in the past year, equivalent to a price-earnings ratio of 43.8 times, compared with 37.5 per cent and 16.6 times for Hong Kong's Hang Seng Index. The Shanghai market is the most expensive in Asia.
'PetroChina does not need to raise funds by issuing shares as it has little debt and has strong cash flows from operations,' said a European brokerage analyst who covers the company. 'It is doing so as a duty to the Chinese government.'