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Sun 17 Nov 2019 02:19 PM

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Saudi stocks fall as Aramco seeks $1.71 trillion IPO valuation

Stocks in Riyadh have underperformed emerging markets since early September

Saudi stocks fall as Aramco seeks $1.71 trillion IPO valuation

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.

Saudi stocks fell, reversing earlier gains, as investors digested the kingdom’s plan to sell a 1.5% stake in the state oil company.

The Tadawul All Share Index dropped 0.4% as of 11:58 a.m. in Riyadh, after climbing as much as 0.4%. Telecommunications stocks led declines, while Al Rajhi Bank and Alinma Bank added the most to gains.

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.

Banking stocks outperformed the main index in Riyadh 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.