Saudi Stocks Fall as Traders Make Room for Aramco's Mammoth IPO
Saudi Stocks Fall as Traders Make Room for Aramco’s Mammoth IPO
(Bloomberg) -- Saudi Arabian stocks were among the top equity laggards in the world on Tuesday as investors paved the way for the biggest share sale in the nation’s history by selling off holdings in other equities.
The Tadawul All Shares Index retreated 1.2% in Riyadh to the lowest level in almost two weeks, as more than 90% of its members fell. Al Rajhi Bank was the biggest drag on the gauge.
Stocks dropped after television news channel Al Arabiya reported subscription for the shares in Saudi Aramco will start on Dec. 4, and trading will start on Dec. 11. Saudi Arabia’s Capital Market Authority will officially announce the start of the initial public offering process on Sunday, Al Arabiya said.
The IPO, which has been at least three years in the making, is part of Crown Prince Mohammed bin Salman’s efforts to modernize the economy and diversify the nation’s revenue from oil, including turning the bourse into a gateway for foreign investment. In 2016, he valued the company at about $2 trillion, although some analysts have said it may be closer to about $1.5 trillion.
The oil giant earned $68 billion in the first nine months of the year, Bloomberg reported earlier. Last year, Aramco earned $111 billion, making it the most profitable business on the planet.
A 1% float of the company could be valued at about $20 billion, which would account for around 4% of the market and could equal a decade of proceeds raised through other IPOs in the Saudi market.
Earlier this month, the Saudi stock index fell into a bear market fueled in part by an increase in geopolitical risk after attacks on Aramco’s facilities in September.
--With assistance from Abeer Abu Omar.
To contact the reporter on this story: Dana El Baltaji in Dubai at delbaltaji@bloomberg.net
To contact the editors responsible for this story: Justin Carrigan at jcarrigan@bloomberg.net, Blaise Robinson, Namitha Jagadeesh
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