China National Petroleum Corp. (CNPC) announced Monday it had purchased 60 million A-shares of its Shanghai-listed subsidiary, PetroChina Co. Ltd.
After the purchase, CNPC now holds 86.32 percent of the total share capital of PetroChina, 0.03 percentage points up from 86.29 before the stock buy-back.
According to PetroChina, CNPC intends to increase its stake in the company during the following 12 months. There is a condition. CNPC can't buy more than two percent of PetroChina's total shares.
CNPC, the Beijing-based oil and gas giant, promised it would not sell any PetroChina shares while it continues to buy them.
The move is a response by CNPC, a major state-owned enterprise (SOE), to the government's calls to stabilize the stock market.
It also demonstrates CNPC's confidence in PetroChina's future value on the stock market, said a CNPC senior executive who declined to be identified.
The State-owned Assets Supervision and Administration Commission announced last Thursday the government would back up its centrally-administered SOEs by buying more stocks of their listed subsidiaries.
It is one of several moves by the government to stabilize the stock market. So far, the stamp tax on stock purchases has been cancelled and Central Huijin Investment Co., Ltd., an investment arm of the government, announced it would buy shares of three major Chinese lenders on the secondary market.
Since listed in the Shanghai stock market in November last year, PetroChina has seen its price slide from a debut of 48.6 yuan (US$7.11) per share to less than 10 yuan, which has caused investor complaints.
Experts said Chinese SOE subsidiaries account for 18 percent of the total number of companies in the market. If those companies started buying back their shares, it would inject more capital to and confidence in the market.
Listed in Hong Kong, New York and Shanghai, PetroChina is a branch of CNPC. Its price in the A-share market jumped 9.96 percent to 12.14 yuan per share on Monday.
(Xinhua News Agency September 22, 2008)
