The history of PetroChina's daily limit: Either in a bull market or in a market rescue

In the afternoon, the oil sector fluctuated and rose, with PetroChina hitting the limit up. This is the first time PetroChina has hit the limit up since July 2015, and the eighth limit up since its listing.

PetroChina was listed in 2007 and is known as one of the "two barrels of oil" along with Sinopec Corp. At that time, PetroChina's market value was significant in the A-share market and was once regarded as a tool for protecting the market by veteran investors.

Although PetroChina's weight in the Shanghai Composite Index has declined, each time PetroChina hits the limit up seems to represent some unusual significance in the market's mind. So, how does the market perform after PetroChina hits the limit up?

Not only PetroChina, the entire A-share market hit the limit up on September 19th and 22nd, 2008

Let's go back to three days before September 19, 2008. In order to hedge against the global stock market crash caused by the US financial storm, the central bank announced an interest rate cut policy. However, the stock market seemed unresponsive at this time and fell below the 2,000-point integer mark without any resistance.

On the evening of September 18th, the Ministry of Finance, Central Huijin Investment Ltd., and the State-owned Assets Supervision and Administration Commission jointly launched three major positive measures: implementing unilateral collection of stamp duty, Central Huijin Investment Ltd. increasing its holdings of Industrial and Commercial Bank of China, China Construction Bank, and Bank of China through the secondary market, and at the same time, the then Director of the State-owned Assets Supervision and Administration Commission, Li Rongrong, also made a clear statement for the first time through answering questions from reporters: the State-owned Assets Supervision and Administration Commission supports central enterprises in repurchasing shares of their controlling companies in the secondary market to stabilize the market.

After the three major policies were announced, the market rose for two consecutive days, and PetroChina also hit the limit up for two consecutive days. However, the policy bottom led the market bottom, and the A-share market did not hit bottom until October 28th, followed by a year-long bull market, with the Shanghai Composite Index rising by 90%.

The weight-forced short-selling trend triggered by brokerage stocks on December 4th, 2014

In the second half of 2014, after the central bank turned to loose monetary policy and the launch of the Shanghai-Hong Kong Stock Connect, brokerage stocks became the leaders of the market. On November 21st, the central bank announced an interest rate cut, breaking the market's moderate upward trend and triggering a short-selling trend.

On December 4th, PetroChina and Sinopec both hit the limit up in the short-term rotation of blue-chip sectors, and brokerage stocks also collectively hit the limit up. However, at the same time, there was also a situation of low sentiment in other stocks, and the market seemed to be in a state of two extremes.

PetroChina's limit up, as a continuation of the bull market, led to a further rise in the A-share market for the next six months, with an increase of 75.8%. In this market situation, on January 5, 2015, the increase in the threshold for special oil income was good news for the performance of the three major oil companies, and PetroChina's stock price hit the limit. On April 27, 2015, influenced by media reports about the possible restructuring and integration of PetroChina and Sinopec, both PetroChina and Sinopec hit the limit, and they respectively issued clarification announcements.

On July 6, 2015 and July 15, 2015, PetroChina protected the market again

In 2015, as the stock market overheated, off-market margin trading and leverage withdrew, and the stock market began to decline in June. In the first three days of July 6, the cumulative decline was 14.4%.

On July 5, the China Securities Regulatory Commission announced that it would fully leverage the role of China Securities Finance Corporation Limited to raise funds through multiple channels and maintain market stability. The central bank also provided liquidity support, and at the same time, Central Huijin issued an announcement that it had bought ETFs in the secondary market and would continue relevant market operations.

On that day, PetroChina's stock price hit the limit, driving A-shares up by 2.41%.

On July 15, both markets fell again, with the Shanghai Composite Index opening lower than 3900 points and falling throughout the day. In the afternoon, it fell nearly 5% to 3741.25 points, but China Petroleum protected the market strongly, narrowing the decline of the Shanghai Composite Index and pushing it back above 3800 points.

However, on that day, only PetroChina and the banking and insurance sector supported the market, while the small and medium-sized enterprises sector saw all leading stocks hit the limit, and individual stocks fell across the board, with 1221 stocks hitting the limit. The main contract of the CSI 500 futures fell by 7.51%, and the other three contracts hit the limit.

At that time, the economic fundamentals and corporate profits were in a downward cycle, and at the same time, the leverage accumulated in the stock market was too high. Therefore, the stock market was in the middle of a bear market, and it only hit bottom after half a year of decline, starting a new round of market trends, with a subsequent decline of 25%.

8 years later, PetroChina hits the limit again, and the Shanghai Composite Index recovers 2900 points

Today, PetroChina hit the limit again, and the news was that the State Council Information Office held a press conference on the 24th. Xie Xiaobing, the head of the Property Management Bureau of the State-owned Assets Supervision and Administration Commission of the State Council, emphasized at the meeting that the next focus will be on improving the quality of listed companies in terms of listing patterns, standardized operations, and market value management. Especially in promoting central enterprises to incorporate the value realization indicators of listed companies into the performance evaluation system of listed companies, timely transmitting confidence and stabilizing expectations through market-oriented methods such as market purchases and repurchases, increasing cash dividends, and better rewarding investors.

Looking at the history of PetroChina's previous seven consecutive limit-up, there were bull markets, bottoms, and continued corrections.

Its limit-up either occurs in a bull market or during market rescue.

So what does today's limit-up of PetroChina imply?