Aramco Stocks Give Up About Half of Gains Since Debut: Inside EM
Aramco Stocks Give Up About Half of Gains Since Debut: Inside EM
(Bloomberg) -- Saudi Aramco shares extended their losses for a fourth session, reversing about half the gains accumulated from the rally following the company’s historic trading debut.
The oil giant’s stocks lost as much as 1.7% on Sunday, before trimming the decline to close 0.6% down at 35.30 Saudi riyals. When shares hit the intraday low, Aramco had pared more than half of its gains since it became the world’s biggest initial public offering.
Investors are seeking new catalysts for the stock after it was included in major emerging-market equity benchmarks, analysts say. Foreigners balked at Aramco’s IPO, citing what they deemed to be an expensive valuation along with concerns that ranged from governance to geopolitical issues. Local investors ended up being the main buyers.
Aramco’s retreat is “quite surprising,” given recent performances of global equities and the oil price, said Vrajesh Bhandari, senior portfolio manager at Al Mal Capital in Dubai. “It could be a bit of profit-taking and some risk-off before retail investors close books ahead of year-end,” he said.
Saudi Arabia’s main index, in which Aramco is the second-biggest member, ended slightly higher. Elsewhere, equity gauges were mostly up, with Kuwait’s index leading gains while Abu Dhabi’s fell 0.3%, the most in the region.
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- Saudi Arabia’s Tadawul All Share Index rose 0.1%, extending gains this year to 6.1%
- Al Rajhi Bank +0.6%; National Industrialization Co. +4.3%; Banque Saudi Fransi +1.1%
- Kuwait’s main index finishes 1.5% higher, extending gains in 2019 to 32%
- NOTE: MSCI Inc. confirmed last week it will move Kuwait to its emerging-market equity index from the frontier gauge next year
- MORE: Kuwait Could Agree With Saudis on Neutral-Zone Oil by End-2019
- In Qatar, the QE Index climbs 1.3%, boosted by Qatar National Bank
- NOTE: Trading resumes in Doha after a two-day holiday last week
- Index is up about 1.7% for 2019, adding to a rally of 21% last year
- Shares of Abu Dhabi-based NMC Health finished last week 47% lower in London, after a sell-off triggered by a report by Muddy Waters criticizing the medical company’s accounts and disclosing a short position
- 90% of the Muddy Water’s report “is repeating things that have already been highlighted by investors over the last 12 months at least,” said Ali Taqi, the head of equities at Rasmala Investment Bank Ltd. in Dubai, in an interview with Bloomberg TV
- Such things “have been addressed in bits and pieces. But these concerns remain there”: Taqi
- “NMC’s reply has come to address all accounting-related issues. But the related-party transactions remain an issue, and remain to be an overhang.”
- NOTE: NMC also said it has approached the Financial Conduct Authority with evidence to show that a number of hedge funds have been acting in concert to undermine shareholder value
- 90% of the Muddy Water’s report “is repeating things that have already been highlighted by investors over the last 12 months at least,” said Ali Taqi, the head of equities at Rasmala Investment Bank Ltd. in Dubai, in an interview with Bloomberg TV
- Read more about NMC Health, from Dec. 20:
- NMC’s Plunge Deepens Even After Rebuttal of Muddy Waters
- Rich Family Under Fire From Muddy Waters Loses $820 Million
- NMC Health Says FT Article Wrong, Goes to FCA Over Hedge Funds
- UAE Health Ministry Denies Speaking With Muddy Waters on NMC
--With assistance from Manus Cranny and Sarah Algethami.
To contact the reporter on this story: Filipe Pacheco in Dubai at fpacheco4@bloomberg.net
To contact the editors responsible for this story: Celeste Perri at cperri@bloomberg.net, Michael Gunn, James Amott
©2019 Bloomberg L.P.
