Aramco listing to propel Tadawul into top 10 global bourses

Saudi Aramco's listing on the Saudi Stock Exchange (Tadawul) today on Dec. 11 will propel Saudi Arabia's bourse into the top 10 largest global stock markets.

Tadawul will become the ninth biggest stock market in the world.

Saudi Aramco’s listing with a price of SAR 32 per share values the oil giant at SAR 6.4 trillion ($1.7 trillion). It is expected to have a float-adjusted weight of 9.6% to 10.9% in TASI.

Tadawul will hold an opening auction for Aramco shares from 9:30 a.m. to 10:30 am, extending it by 30 minutes. Continuous trading will commence after that, with daily price fluctuation limit of 10%.

In a recent note, Dalma Capital said that there is a high probability of the 15% greenshoe option to be exercised, which will up the deal size to $29.4 billion – surpassing Alibaba’s record by 17%.

“Even if the greenshoe is exercised, the oversubscription still amounts to 404% and the additional shares will not be sufficient to meet demand," it added.

The investment advisory expects to see Aramco bid up to $2 trillion or higher in the first days of trading, and potentially to trade limit up on the first day.

Vrajesh Bhandari, senior portfolio manager - asset management, Al Mal Capital, echoed the same views in an interview with Argaam, expecting Aramco shares to hit limit up on the first trading day.

"There has been a good amount of interest in the IPO wherein several accounts have not got any allocation and they would want to take immediate exposure to this mega-cap stock,” he noted.

Regardless of the immediate upside, Bhandari added the firm believes this is a strong medium-term story that can anchor different kinds of portfolios.

Meanwhile, Vijay Valecha, chief investment officer, Century Financial, expected Aramco to hit $2 trillion valuation in the first few weeks of trading as the pent-up demand is huge.

Following the oil giant’s debut on Tadawul today, Salah Shamma, Head of Investment, MENA, Franklin Templeton Emerging Markets Equity, said that Saudi Aramco’s successful listing is a clear demonstration that the Kingdom is continuing to move ahead with its bold economic transformation.

In addition, Aramco plans to pay dividends at $75 billion (SAR 281.25 billion) for 2020 with plans of a progressive growing dividend on a sustainable basis. The yield is considered competitive with other oil majors such as Exxon Mobil and Royal Dutch Shell.

For more details about Saudi Aramco IPO