Devoted to Managers and those that seek to improve their management skills

Is Exxon Mobile (XOM) now a Small Cap stock?

When the Chinese government raised gasoline prices in anticipation of PetroChina (PTR) being listed on the Shanghai Stock Exchange, most people pretty well knew that they'd get the bragging rights to being the largest company in the world, surpassing Exxon Mobile to reach those honors.

I don't think in their wildest dreams they thought it could reach a market value of $1 trillion though, which it did today; making it the first company in history to do so. Shares in the company tripled in the early part of the trading day.

Shares in the company rose from a price of Rmb16.70, to surge to Rmb48.60 in a very short time period. The company offered 4 billion shares on the Shanghai Exchange, roughtly about 2.2 percent of its expanded share capital.

This does give some bragging rights to the company and government, but it is also a sign of a bubble that could collapse at any time and make a huge impact on investors; especially Chinese investors who really don't know how to handle something like this, as it's never happened before.

Even seasoned investors from the U.S. got burned on the collapse of the dotcom bubble, which isn't anywhere near as big as is happening in China. Just like some inexperienced people at that time, the Chinese have never seen anything like their stock market over the last years, and really are going to learn the hard way someday, that what comes up in this way, will eventually come crashing down. At that time the country will be put under extraordinary pressure as people won't know how to practically or emotionally respond.

Nonetheless, this shows the extraordinary opportunities and risks that investment in China holds for people and institutions.

I bet Warren Buffett wishes he had held on to PetroChina for his Berkshire Hathaway (BRK-A) investors for a little while longer. In reality he doesn't care, as he never regrets taking out money at certain points of unpredictable stock movements in a volatile market and place in the world.

Ah, for the good old days when market caps were in the tiny $400 billion to $500 billion range.