Shares in PetroChina become fully tradable

A total of 400 million non-tradable shares in Shanghai-listed PetroChina Co, China's largest oil and gas producer and supplier, are to be made available for trading Friday, but analysts said the move will have a limited impact on the capital market.

According to Shanghai Stock Exchange (SSE) regulations, controlling shareholders cannot sell their shares within three years after a company applies for an IPO, so as to prevent market speculation and dramatic share price fluctuations.

State-owned China National Petroleum Corp (CNPC), the parent company of PetroChina, promised to hold onto the 400 million shares it held in the company when PetroChina applied for a listing in 2007, until November 8, 2010.

But in 2009, CNPC sold the 400 million shares to the nation's Social Security Fund in accordance with the central government's requirement to transfer State-owned shares to the Social Security Fund.

This extended the lock-up period for another three years until Friday.

With the lock-up period expiring on Friday, all the shares in PetroChina will become transferable, but analysts said this will have only a small impact on the stock market and the company's share price.

"The share price of PetroChina has declined by around 80 percent since it was listed, with its price-earnings ratio declining to a relatively safe level, so the possibility of a dramatic price fluctuation is relatively small," Li Daxiao, director of research with Yingda Securities Co, told the Global Times Thursday.

The 400 million non-tradable shares account for 0.22 percent of the total shares in PetroChina, said the company, which saw its share price decline Thursday by 1.01 percent to 7.83 yuan ($1.28).

Based on the current share price, the market value of the 400 million shares is 3.1 billion yuan, 40.2 percent lower than their value of 5.24 billion yuan in November 2009, when the Social Security Fund bought these shares.

An insider at a securities brokerage agency told the Global Times Thursday it was unlikely that the Social Security Fund will reduce its holdings of PetroChina shares, despite their drop in value, as the company is still the country's largest oil and gas producer and has solid business performance.

The net profits of PetroChina hit 29.77 billion yuan in the third quarter, up 19.4 percent year-on-year.