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Saudi Stocks Fall as Aramco Seeks $1.71 Trillion IPO Valuation

DATE POSTED:November 17, 2019

Saudi Stocks Fall as Aramco Seeks $1.71 Trillion IPO Valuation(Bloomberg) -- 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.”Read more details on Aramco’s IPO.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.Read more on the strategy by some Saudi banks for Aramco’s IPO.Elsewhere in the region, stocks were mixed. Gauges in Israel, Dubai, Kuwait, Egypt and Oman rose as much as 0.8%, while indexes in Abu Dhabi, Bahrain and Qatar declined as much as 1.2%.To contact the reporter on this story: Filipe Pacheco in Dubai at [email protected] contact the editors responsible for this story: Celeste Perri at [email protected], Neil Denslow, James AmottFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.