Chinese state-controlled oil giants crashed in Hong Kong trading after Reuters reported on Monday that the Trump administration was poised to add China’s top offshore oil and gas producer to a sanctions list, threatening to cripple its international operations.
CNOOC slumped as much as 13.4 per cent to HK$8.18, set for the biggest one-day slump since a 17.2 per cent setback on March 9, just weeks before global oil prices slipped below zero for the first time. The oil explorer is a 64 per cent-owned flagship of China National Offshore Oil Corp.The potential action against CNOOC, as reported by Reuters, and other Chinese corporations would follow a decision in August against 11 Chinese firms and a designation of 20 top Chinese firms including those “owned or controlled” by the People’s Liberation Army.The escalation in sanctions is likely to make life harder for President-elect Joe Biden in his policy on the soured US-China relationship. Trump himself signed an executive order earlier this month banning US persons from transacting in securities of “Communist Chinese military companies.”
“The most damaging would be restrictions on access to US dollar financing, or equally bad, restricting work with US companies or persons,” said Neil Beveridge, a senior analyst at Sanford C. Bernstein. “This could effectively paralyse CNOOC’s international operations. This does not feel like a buy-on-the-dip moment.”
Beveridge cautioned that the Reuters report remained unconfirmed. “We don’t know if this may apply to the listed unit or the parent company, and what sort of measures the US may be seeking,” he added.
PetroChina, the listed arm of China National Petroleum Corporation, also dropped as much as 5.7 per cent to HK$2.48. China Petroleum & Chemical Corp or Sinopec fell as much as 5.3 per cent to HK$3.57.
Courtesy: South East China Post