Choppy waters distance Chinese business from western capital. Cnooc, a driller in the contested South China Sea, embodies that gulf. The US expelled China’s biggest offshore oil and gas producer from the New York stock market in 2021, deeming it a security threat.

Cnooc’s politicised status invites scepticism from international investors, despite a triumphant homecoming listing in Shanghai on Thursday.

The group raised Rmb28bn ($4.4bn) and the shares jumped as much as 44 per cent. Fortune has favoured the state-controlled oil major. Rising oil prices pushed net profit to a record high last year. A further jump in prices following Russia’s invasion of Ukraine means that Cnooc expects first-quarter profits to grow as much as 89 per cent.

The war has also spawned new risks. Cnooc owns a stake in an Arctic liquefied natural gas project in Russia, Arctic LNG 2. This could expose the business to secondary sanctions, if the US decides to impose them.

Cnooc’s operations in the South China Sea are already a bone of contention. The area is core to Cnooc’s oil and natural gas production. The Trump administration blacklisted the group last year for alleged bullying of foreign oil groups there.

Cnooc is reportedly preparing to quit the UK, US and Canada in response.

Geopolitical risk is reflected in the valuation of Cnooc’s Hong Kong-listed shares. These have traded at a steep discount of nearly a half to local peers including Sinopec and PetroChina on a forward earnings basis since last year.

Sheer volatility is another peril. Shares of China Telecom, another homecoming giant, rose more than a third on its Shanghai debut in August. The stock has fallen 36 per cent since then, as Chinese equities lost some of their lustre.

The broader benchmark CSI 300 index of Shanghai and Shenzhen-listed stocks is down a fifth this year. About three-quarters of large local listings this year now trade below their offer prices, according to Bloomberg data. To keep Thursday’s gains, Cnooc will need to make fast asset sales at keen prices.

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