Saudi bourse losses rise amid pressure to open Aramco IPO
Saudi Arabia’s stock market losses plunged as financial stocks fell sharply as banks pushed the index down.
The stock index lost 1.2%, falling for the third day in a row, while Al Rajhi Bank fell 1% and Riyadh Bank 1.4%.
Observers believe the public offering of Saudi oil giant Aramco is putting pressure on investors in the local stock market.
It is reported that Aramco will go public on December 4 and that the company aims to announce the launch of its IPO on November 3 after postponing the process earlier this month to allow time for advisors to secure key investors.
Observers said the Saudi stock market would remain in decline and pressure until the completion of the Aramco IPO, adding that there is a sale and withdrawal of liquidity in some companies to enter the IPO.
The IPO of five percent of the company has been delayed more than once.
Failure to reach $2 trillion in Aramco’s valuation was widely seen as the main reason for the postponement of the 2018 IPO. Experts estimate the company to be worth $ 1.5 trillion.
The IPO is the cornerstone of Mohammed bin Salman’s reform program to diversify the kingdom’s economy and reduce its dependence on oil.
Aramco Chairman Yasser Al-Rumayyan was asked about the launch on the first day of the “Future Investment Initiative” conference in Riyadh. “We will have many shareholders soon,” he said.
Aramco opened its books for the first time since its nationalization 40 years ago, with international rating agencies Fitch and Moody’s in April as part of its preparations to raise funds from investors.
In August, Aramco reported its mid-term revenue for the first time in its history, noting that it declined in the first half of 2019 to $ 46.9 billion, compared with $ 53.0 billion for the same period last year.
Aramco estimates its proven oil reserves at 227 billion barrels and its hydrocarbon reserves at 257 billion barrels of oil equivalent, enough for more than half a century, a high and comfortable level, according to Fitch.
Aramco has already delayed the launch of its IPO in order to update its financial results for the third quarter.
“They want to do everything they can to reach the target value … and strong results after the attack will put them in a stronger position,” sources said, referring to the September 14 attack on two oil facilities in Saudi Arabia.
Similarly, the Financial Times quoted informed sources as saying that Aramco wants to wait until it can provide investors with full information about its latest quarterly profit.
According to the Financial Times, Riyadh is seeking to sell up to 3% of Aramco on the local bourse by November.
Riyadh believes that the priority is now for local listing, followed by listing on international stock exchanges.
