MercoPress. South Atlantic News Agency

PetroChina becomes world's second largest company

China's main oil coporation, government owned PetroChina Co. Ltd. shot past giant General Electric Co. to become the world's second-largest company. After its stock rose 13% on hopes of big new oil discoveries, the company's market value reached more than 430 billion US dollars, second only to Exxon Mobil Corp.'s 518 billion.

Two other Chinese companies, China Mobile and the Industrial Bank of China, are fourth and fifth, both ahead of Bill Gates's giant Microsoft Corp. General Electric is now third with a market value of 420 billion. Of the world's 25 top valued companies, seven are now Chinese. China's economy has been growing at more than 10% a year for than two decades. In the second quarter of this year, growth hit 12.9%, the fastest pace in 12 years. "In any economy that is growing that fast, the opportunities for amassing huge amounts of capital are substantial," said Joseph D'Cruz, a business professor at the University of Toronto's Rotman School of Management. But he said that the lack of solid financial controls and market regulations made it hard to know whether astronomical valuation's like PetroChina's are reliable. Another UofT expert Loren Brandt agreed. "I've never put a lot of weight on the market value of Chinese companies" he said. "If you look at the value of a lot of Japanese companies right before the bubble burst, they were worth a fortune." Japan's stock market fell in the late 1980s, marking the start of an economic downturn that lasted more than a decade. PetroChina's shares have risen more than sevenfold since 2003. They continued to rise even after legendary US investor Warren Buffet's Berkshire Hathaway Inc. began cutting its stake in PetroChina. Its value has risen more than 50% this year alone. The shares trade on the New York and Hong Kong exchanges and the company is planning an offering on the Shanghai exchange soon. It reported in August that its first-half profit rose 1.4% from a year earlier, reaching 10.8 billion US dollars.