Logo of Phnom Penh Post newspaper Phnom Penh Post - Saudi bourse sags as Aramco listing looms

Saudi bourse sags as Aramco listing looms

Content image - Phnom Penh Post
The Saudi stock market is the largest bourse in the Middle East and North Africa with a capitalisation of $500 billion. FAYEZ NURELDINE/AFP

Saudi bourse sags as Aramco listing looms

Saudi stocks sagged two per cent on Sunday after the announcement that the blockbuster listing of state energy firm Aramco was headed its way, as analysts warned it risked overwhelming the local bourse.

After years of repeated delays, Aramco on Sunday announced its intention to float an unspecified percentage of its shares on the Tadawul stock market, the region’s biggest capital market.

The state-owned company however said there was no decision yet on the second part of the initial public offering (IPO) to list on an international stock market, raising doubts that this much-anticipated step will ever happen.

The local bourse lost 1.99 per cent to 7,590.33 points during the session.

Ellen Wald, author of “Saudi Inc.”, said listing on the domestic market without any plans for an international offering was risky because it could “completely overweight” the local market.

“If oil prices drop or Aramco stock falls, it is such a large part of Tadawul, it could bring the entire stock market down,” she warned.

The Saudi stock market is the largest bourse in the Middle East and North Africa with a capitalisation of $500 billion, and although it has undergone key reforms in the past several years, more regulatory work is still needed.

If Saudi Arabia decides to sell two per cent of the company, it could generate close to $40 billion, a huge amount that would impact liquidity levels in a country that has been facing sharp declines in oil revenues.


The richest Saudi families, many of whom had members detained in Riyadh’s Ritz-Carlton hotel during a months-long corruption crackdown in 2017, have been pressed to commit large sums, Bloomberg News has reported.

The Tadawul All-Shares Index (Tasi) fell 4.0 per cent last month as investors opted to sell their holdings to generate the necessary cash for the Aramco IPO. The Tasi is now 1.0 per cent down on last year’s close.

“Pressuring rich Saudis, many of whom were imprisoned at the Ritz, to invest in the Aramco IPO and to hold on to the shares is basically coercion,” Wald said.

The giant listing could end up taking money out of the Saudi economy that could be used to diversify it in more fundamental ways, analysts say.

“The IPO could cause a setback that will vacate a lot of money out of the other industries,” said Samir Madani, co-founder of website Tanker Trackers, an oil shipping monitoring website.

“If Saudi citizens take on large loans in order to buy overpriced shares, they could be stuck with big piles of mortgage debt in the event of a market crash.”

Tadawul has also eased conditions for foreigners to enter the market, which won boost this year when it was included in the MSCI Emerging Markets Index – a move which typically spurs foreign investment inflows.

However, despite introducing a number of reforms the kingdom has struggled to attract the funds it needs to remodel its economy.

The Riyadh bourse said it was ready and able to deal with such a huge share offering.

“We are proud that Aramco has selected Tadawul as the venue for the intended listing of its shares. Tadawul and its infrastructure are ready to receive this historical listing,” CEO Khaled al-Hussan said on Twitter.

“Saudi Aramco’s selection of Tadawul will mark a major milestone in Saudi Capital Market’s journey and bolster our position among international stock exchanges.”


  • Angkor lifetime pass, special Siem Reap travel offers planned

    The Ministry of Tourism plans to introduce a convenient, single lifetime pass for foreign travellers to visit Angkor Archaeological Park and potentially other areas. The move is designed to stimulate tourism to the culturally rich province of Siem Reap as the start of the “Visit

  • Ice cream, noodles flagged over carcinogen

    The General Department of Customs and Excise of Cambodia (GDCE) has identified three types of instant noodles and ice cream trademarks originating from Thailand, Vietnam and France that are suspected to contain ethylene oxide, which poses a cancer risk to consumers. The general department has

  • Exclusive interview with Josep Borrell Fontelles, High Representative of the EU

    CAMBODIA is hosting the 55th ASEAN Foreign Ministers’ Meeting (AMM) and Related Meetings this week with top officials from the US, China, and Russia and other countries in the region slated to attend and to meet with face-to-face with their counterparts on the sidelines. In

  • Rise in Thai air routes to Siem Reap fuels travel hopes

    Local tourism industry players are eager for regional airline Bangkok Airways Pcl’s resumption of direct flight services between the Thai capital and Siem Reap town on August 1 – home of Cambodia’s awe-inspiring Angkor Archaeological Park – which is expected to boost the growth rate of

  • ASEAN Foreign Ministers’ meet commences, Taiwan issue possibly on table

    The 55th ASEAN Foreign Ministers’ Meeting (AMM) and related meetings hosted by Cambodia kicks off in Phnom Penh on August 3, with progress, challenges, and the way forward for the ASEAN Community-building on the table. Issues on Taiwan, sparked by the visit of US House Speaker

  • Recap of this year’s ASEAN FM meet and look ahead

    This year’s edition of the ASEAN Foreign Ministers’ Meeting (AMM) hosted by Cambodia comes against the backdrop of heightened global tensions and increasing rivalry between major powers that have been compared to the animosity of the Cold War era. The following is The Post’