The main Saudi stocks index finished little changed on Sunday after swinging between gains and losses as investors digested the kingdom’s plan to sell a 1.5% stake in the state oil company.
The Tadawul All Share Index ended 0.1% higher, after climbing as much as 0.4% and retreating as much as 0.7% during the session. Al Rajhi Bank and Alinma Bank added to gains, while Saudi Arabian Mining Co., or Maaden, declined.
Saudi Aramco, the world’s most profitable company, said in an updated prospectus on Sunday that it will offer shares in a range of 30 Saudi riyals to 32 Saudi riyals, for a valuation of as much as $1.71 trillion. Investors may now be positioning for what could be the world’s largest initial public offering at as much as $25.6 billion, even if the stake sale size is smaller than some analyst forecasts.
Investors should expect “a very volatile market today and in the upcoming days,” said Joice Mathew, head of equity research at United Securities in Muscat, Oman. “Banks could get a boost at first, since they could be making some money from it, but the rest of the market could be under pressure.”
Stocks in Riyadh have underperformed emerging markets since early September, when the Saudi government accelerated preparations to sell shares in the state oil company. Several analysts and investors said that the gigantic IPO could suck liquidity from other shares trading in Riyadh.
Saudi index has lagged EM peers since preparations for Aramco IPO acceleratedStill, banking stocks outperformed the main Saudi gauge last week as analysts and investors focused on potential revenue boosts from brokerage fees and financing products offered to investors seeking to buy Aramco shares. Al Rajhi Bank, the biggest Saudi bank by market capitalization, is up 5.1% this month.
Elsewhere in the region, stocks were mixed. Gauges in Israel, Dubai, Kuwait, Egypt and Oman rose as much as 0.7%, while indexes in Abu Dhabi, Bahrain and Qatar declined as much as 1.5%.Saudi Arabia’s main equity index advanced the most in the Middle East after the pricing of Saudi Aramco’s initial public offering and amid hopes of higher oil prices.
The Tadawul All Share Index rose as much as 1.8% within the first hour of trading on Sunday.
The kingdom raised $25.6 billion from the world’s biggest IPO after selling shares at 32 riyals ($8.53) each. That was the top end of the range and values the energy company at $1.7 trillion. It received total bids of $119 billion. Aramco shares will start trading in Riyadh on Wednesday.
Saudi Arabia said Friday it will cut oil supply by more than what was agreed with fellow OPEC+ members, as it guns for a $2 trillion valuation for Aramco. Oil prices climbed following the announcement.
Aramco has been “fairly valued and there is definitely some room to rally from here,” said Aarthi Chandrasekaran, a portfolio manager in Abu Dhabi at Shuaa Capital, in an interview to Bloomberg TV. And the oil cuts by the Saudis were “very well-timed,” she said.
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