CNOOC target raised 12.5% to HKD 36 after US blacklist removal

CLSA raised CNOOC's target price 12.5% to HKD 36, citing the US decision to remove the oil giant from a military blacklist that had blocked foreign investors since 2021.

The US Department of Defense removed CNOOC from its list of Chinese military companies, a designation that had prohibited American and other foreign investors from buying the stock, CLSA said in a note. The brokerage reiterated its outperform rating on the Hong Kong-listed shares.

The new target of HKD 36 compares with the previous HKD 32, implying a 12.5% upside from the prior target. CLSA also raised its A-share target for CNOOC, though it did not disclose the new level.

CNOOC was added to the US military blacklist in 2021 under the Trump administration, alongside other Chinese companies deemed to have ties to the People's Liberation Army. The designation triggered forced selling by index funds and pension funds that track global benchmarks, creating a persistent overhang on the stock.

The removal opens CNOOC to foreign institutional buying that was previously prohibited. CLSA said this represents a major breakthrough for the stock, which had traded at a discount to global peers due to the restriction. The decision could also ease concerns about other Chinese energy companies facing similar designations.

The delisting comes as the US and China navigate a tense rivalry over technology, trade and national security. While Washington has maintained export controls on Chinese AI and semiconductor firms — including holding off on blacklisting DeepSeek and memory chipmaker CXMT, according to Reuters — the CNOOC removal signals a potential carve-out for energy companies.

For CNOOC holders, the removal of the blacklist overhang removes the primary structural discount on the stock. Investors will watch for foreign fund flows into the name over the coming weeks as index rebalancing takes effect.

This article is for informational purposes only and does not constitute investment advice.