2 trln yuan shares become tradable on market
November 09th, 2010 | CNTV.CNThe peak time for locked-up shares becoming tradable has arrived. PetroChina shares worth around 2 trillion yuan will be released Monday, raising concerns about volatility on the market.
Locked-up shares worth around 11 percent of the combined value of A-shares listed on the Shanghai and Shenzhen markets, will become tradable this week. This is a record amount, unlikely to be ever surpassed.
Three years after its IPO, PetroChina’s locked-up shares, worth around 2 trillion yuan became tradable on Monday.
Will the release have a serious impact on market capital supply and volatility? Industry insiders think such concerns are unwarranted.
PetroChina, as the largest holder of its locked-up shares, is a strategic investor. And it’s unwilling to reduce its stake.
Huang Xiangbin, Senior Analyst of Cinda Securities said “Since the U.S. Federal Reserve launched its quantitative easing policy, the value of resource products have huge potential to increase. Therefore, it’s also unlikely for large stakeholders to reduce their stakes.”
Previous cases show the State-Owned Assets Supervision and Administration Commission, a large stakeholder, rarely reduces its holdings. So PetroChina will only face that situation if the National Council for Social Security Fund sells its 400 million yuan worth of shares.
Huang Xiangbin said “Whether it’s viewed from the perspective of performance or evaluation, I think PetroChina is still undervalued. So shareholders’ willingness to sell won’t be very strong.”
With high market value, PetroChina’s share price won’t see many fluctuations. And this will help stabilize the stock market.
Facing this tide of share releases, many ordinary investors are still very cautious. They’re taking possible risk-aversion measures, despite confidence in the market.