Aramco’s Long-Awaited IPO May Be Kryptonite to Saudi Stocks - Bloomberg:
It’s been at least three years in the making, but it’s just dawned on investors what a share sale by Saudi Aramco would do to the Arab world’s biggest stock exchange.
The Tadawul All Share Index almost wiped out this year’s gains after the kingdom’s efforts to line up banks for the sale spurred market players to realize the initial public offering really is happening. About 90% of the index’s stocks fell.
“All local index constituencies should suffer outflows,” said Slava Breusov, a senior analyst with the emerging and frontier equities team at AllianceBernstein in New York.
The IPO 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. The kingdom spent years relaxing rules for foreign traders and aligning its market with global peers, culminating in its inclusion in MSCI Inc. and FTSE Russell’s developing-nations equity benchmarks.
It’s been at least three years in the making, but it’s just dawned on investors what a share sale by Saudi Aramco would do to the Arab world’s biggest stock exchange.
The Tadawul All Share Index almost wiped out this year’s gains after the kingdom’s efforts to line up banks for the sale spurred market players to realize the initial public offering really is happening. About 90% of the index’s stocks fell.
“All local index constituencies should suffer outflows,” said Slava Breusov, a senior analyst with the emerging and frontier equities team at AllianceBernstein in New York.
The IPO 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. The kingdom spent years relaxing rules for foreign traders and aligning its market with global peers, culminating in its inclusion in MSCI Inc. and FTSE Russell’s developing-nations equity benchmarks.
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