Key to Aramco’s Calm January Lies in Hands of Saudi Stock Owners - Bloomberg:
January delivered a hefty slice of volatility for oil and global energy stocks as the spreading coronavirus shocked investors. But in Riyadh, shares in Saudi Aramco followed a different narrative in their first full month of trading.
The stock weathered the month -- marked by the U.S. killing of an Iranian general and then the spread of the coronavirus -- much better than oil-major peers, ending well above the price set at its record initial public offering. Aramco retreated 3.1% in January, in contrast with the 12% slump in Brent crude and a drop of more than 10% for global peers such as Chevron Corp., Total SA and Royal Dutch Shell Plc.
The reason for the outperformance lies within Saudi Arabia itself. Shares in the oil giant are mostly owned by locals, who are less likely than foreign money managers to sell in times of increased geopolitical tension or during swings in the oil price. The government relied heavily on local investors and funds based in neighboring Gulf monarchies to sell about 1.7% of Aramco in the world’s biggest IPO, with almost five million individuals -- more than one-in-seven Saudi residents -- placing bids. In the end, foreigners subscribed for 23.1% of the stock on offer.
January delivered a hefty slice of volatility for oil and global energy stocks as the spreading coronavirus shocked investors. But in Riyadh, shares in Saudi Aramco followed a different narrative in their first full month of trading.
The stock weathered the month -- marked by the U.S. killing of an Iranian general and then the spread of the coronavirus -- much better than oil-major peers, ending well above the price set at its record initial public offering. Aramco retreated 3.1% in January, in contrast with the 12% slump in Brent crude and a drop of more than 10% for global peers such as Chevron Corp., Total SA and Royal Dutch Shell Plc.
The reason for the outperformance lies within Saudi Arabia itself. Shares in the oil giant are mostly owned by locals, who are less likely than foreign money managers to sell in times of increased geopolitical tension or during swings in the oil price. The government relied heavily on local investors and funds based in neighboring Gulf monarchies to sell about 1.7% of Aramco in the world’s biggest IPO, with almost five million individuals -- more than one-in-seven Saudi residents -- placing bids. In the end, foreigners subscribed for 23.1% of the stock on offer.
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