What’s next for Saudi Aramco share price after US$2.03 trillion valuation?
Saudi Aramco’s long-term stock value will depend a lot on how it fares on the international stage, said one top analyst.
 32409829347898.jpg/jcr:content/renditions/original-size.webp)
The headlines surrounding Saudi Aramco’s (Tadawul: 2222) initial public offering this December have mostly been hyperbolic, and as it appears, rightfully so.
The state-owned oil and gas firm’s IPO on the local stock exchange earlier this month has not only surpassed expectations; it shattered all records to become the biggest listing in history with US$25.6 billion raised.
Upon launching, share price immediately shot beyond the projected fluctuation limit of 10%, achieving a valuation of US$2.03 trillion on day two of trading, a feat for a flotation of its size.
Earlier this week on Monday, 16 December, shares were trading as much as 21% above the listing’s opening price of 32 Saudi riyals (US$8.53) per share.
Can share price stay at the same level?
With the market reception so far having been nothing short of impressive, how will share price move in the coming months?
This would depend on a multitude of political factors, according to analyst Ariel Cohen, Director of the Energy, Growth, and Security Program at the International Tax and Investment Center.
Those factors include ‘uncertainty due to low oil prices, climate change concerns, and geopolitical unrest in the region’, Cohen wrote in a commentary on Forbes.
He added that global criticism for the murder of Saudi Arabian journalist Jamal Khashoggi, tanker incidents in the Persian Gulf, as well as foreign missile attacks on two oil facilities in September, also ‘justly appear as strong disincentives for long-term institutional investors’.
Learn how to trade company shares with an IG demo account now
Lacking international investors
Additionally, with the bulk of funds so far made up of local institutions and government agencies, ‘current investment still lacks the international diversification sought by executives’, Cohen further noted.
Saudi Aramco’s shares are set to become available on foreign bourses starting later this week, including the Morgan Stanley Capital International Emerging Markets Index and the FTSE All-World Index.
Cohen stated that while the local listing has been ‘unequivocally impressive’, the ‘real test’ will come as shares become available overseas.
‘This week should provide better insight into the appetite of international investors, and the longer term viability of the historic IPO,’ he concluded.
Saudi Aramco shares are currently trading at 36.30 riyals.
Practise trading CFDs and other products with an IG demo account now
This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only
