9-Day Decline as Institutional Investors Flee

Though the price of Petrochina stock stopped its slide last Friday, its previous plunge of nine consecutive days from 1 Sept to 11 Sept 2008 led the stock price to decrease from RMB 13.00 to near RMB 10.00, which weighed heavily on the broader market. Data shows that institutional investors are the main force dragging Petrochina's stock down.

Petrochina suffered a 18.31% slump in the first nine trading sessions of September, much higher than the 13.28% drop of the Shanghai Composite Index during the same period.

According to seats trading data provided by GW Topview, the top 10 buyers bought a total of RMB 209 mln in the nine sessions, which is RMB 59 mln less than the RMB 268 mln sold by the top 10 seats on the seller list. Five of the top 10 buyers were funds, while six were queuing at the top 10 sellers list during the first nine sessions this month.

GW Topview's data show that QFII (qualified foreign institutional investors) seem to prepare for a bottom fishing of Petrochina. In the aforementioned nine sessions, four operation branches were seen among the top 10 buyers, including two well-known QFII owners, the operation branch UBS Securities, which bought RMB 19.96 mln worth of Petrochina shares in six separate acquisitions, and Shenyin Wanguo Securities' operation branch located at Shanghai Xinchang Road, which made two acquisitions for RMB 11.96 mln.

However, with the steep decline of Petrochina's stock, the total stake held by institutional investors dropped by 0.6% from 13.1% on 29 Aug to 12.5% on 11 Sept 2008.

Petrochina's 2008 Semiannual Report shows that among the top 10 holders of tradable shares, nine of them, including QFII, together held a 0.82% stake in 1H 2008, equal to that of the first quarter. But according to certain statistics, 113 shareholders sold Petrochina's shares, with only 73 holders maintaining their holding, 19 of which were new fund management companies. Additionally, shares sold by fund management companies were up 28.17% from that of the previous month.

In addition to Petrochina, another oil giant Sinopec was seen to extend its losing streak. In eight trading days from 1 Sept to 11 Sept 2008, the Shanghai Huaihai (M) Road branch of China International Capital Corporation Limited sold a total of RMB 30,61 mln shares of Petrochina.

Whereas, the funds seemed to place goodwill on Sinopec, as they filled up the top 10 buyers seats, while occupying eights seats on the top 10 sellers list. On 8 Sept, three seats under the code '4590' sold RMB 104 mln shares of Sinopec.

Statistics revealed that a total of 122 fund management companies held Sinopec's shares in 1H 2008, 67 companies less than that at the end of 2007, but meanwhile, 53 new fund management companies came in to share a stake.


Source: China Business News

Date: 16 Sept 2008

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