There are lots of ways to climb the ranks of the world’s biggest companies.
Apple Inc. surged to the top by making must-have gadgets with big profit margins. Berkshire Hathaway Inc. harnessed the stock-picking genius of Warren Buffett. And Google Inc. created a lightning-fast search engine.
Now PetroChina Co. is doing it the Chinese way -- with a whole lot of help from government intervention. Shares of the state-run oil producer have surged 31 percent since June 26, bucking a 13 percent drop in the Shanghai Composite Index, as state-directed funds piled into shares of China’s biggest companies to prop up the country’s sinking stock market.
The rally has propelled PetroChina’s market capitalization to $382 billion, surpassing Google to become the world’s second-largest company behind Apple.
If the widening price gap between PetroChina’s domestic shares and Hong Kong counterparts is any guide, international investors don’t believe the gains are sustainable. The company’s yuan-denominated A shares are trading at a 104 percent premium versus those in Hong Kong, the most since 2009, after shares in the city slumped 4.1 percent since June 26. Crude oil lost 11 percent in New York during the same period.
“The stock is not trading on fundamentals,” said Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein Ltd. “The valuation of A shares still looks excessive.”