Hong Kong-listed energy equipment providers posted strong gains during Thursday’s trading session, with Shandong Molong Petroleum Machinery (00568.HK) soaring 11.19% on heavy volume. The rally among oilfield service companies came amid renewed focus on China’s energy security initiatives and rising crude oil prices.
Sector-Wide Momentum Emerges
The upward movement extended across the energy services value chain:
- Sinopec Oilfield Service (01033.HK) advanced 7.50% after securing new drilling contracts in Xinjiang
- Sinopec Engineering (02386.HK) edged up 0.66% despite broader market weakness
- Offshore Engineering Players， Multiple small-cap equipment makers rose 3-5% in sympathy
Fundamental Drivers Behind the Rally
Market analysts identified several catalysts for the sector’s outperformance:
- Policy Support: China’s NDRC announced accelerated approvals for shale gas development projects
- Commodity Tailwinds: Brent crude prices stabilizing above $85/barrel after OPEC+ supply discipline
- Order Flow Visibility: CNOOC’s 2024 capital expenditure guidance remaining robust at RMB120-140 billion
Valuation and Technical Considerations
The sector’s advance comes despite:
- Shandong Molong still trading at 0.8x P/B versus historical average of 1.2x
- Sinopec Oilfield Service facing 15% EPS downgrades last quarter
- Energy services stocks generally underperforming the broader market year-to-date
Trading volume in energy equipment names reached HK$1.8 billion by midday, with particular interest in companies exposed to:
- Domestic unconventional gas development
- Middle East export opportunities
- Offshore wind/oil hybrid projects
Morgan Stanley analysts noted the rally appears partly driven by short-covering, as energy services had been among the most shorted sectors in Hong Kong this quarter. The moves suggest growing conviction about China’s commitment to maintaining energy self-sufficiency targets despite economic headwinds.
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