RIYADH/DUBAI (Reuters) – Saudi Aramco shares surged the maximum permitted 10% above their IPO price on their Riyadh stock market debut on Wednesday, in a move hailed by the government as a vindication of its towering $2 trillion valuation of the state oil company. The shares leapt to 35.2 riyals ($9.39) each, up from the initial public offering (IPO) price of 32 riyals and at the daily limit of price moves allowed by the Tadawul exchange. That gives Saudi Arabian Oil Co (Aramco) a market value of about $1.88 trillion, comfortably making it the world’s most valuable listed company and closing in on the $2 trillion price tag long coveted by Saudi Crown Prince Mohammed bin Salman. “It’s a great day for Saudi Arabia and the leadership of Saudi Arabia and for the people of Saudi Arabia. It’s a D-Day for Aramco, it’s a day of reckoning and vindication,” Energy Minister Prince Abdulaziz bin Salman told Reuters in Madrid. Aramco raised a record $25.6 billion in its IPO last week, the culmination of a years-long effort by the Crown Prince to open up the energy giant to outside investors and raise funds to help diversify the economy away from oil. But the kingdom cut back original plans to sell a 5% stake and include a foreign listing after lukewarm interest from international investors worried about Aramco’s governance, the environment and regional instability – particularly after drone attacks on major Aramco facilities in September. The company sold just a 1.5% stake and relied on mainly domestic and regional buyers. Prince Abdulaziz said last week that Aramco was worth well over its IPO valuation of $1.7 trillion and predicted investors who didn’t buy into the offering would be “chewing their thumbs” after missing out.
The flotation propels the Riyadh bourse into the world’s top 10 by value of listed companies.
The early share price gain values Aramco at more than six times U.S. oil major Exxon Mobil Corp more than twice Saudi Arabia’s annual gross domestic product; and far ahead of U.S. tech giant Apple’s $1.2 trillion price tag. “This is a successful IPO and the Aramco listing will add depth to the local market by providing exposure to a vital sector of Saudi Arabia’s economy,” said Bassel Khatoun, managing director, frontier and MENA at Franklin Templeton Emerging Markets Equity.
But investing in Aramco is a bet on the price of oil and growth in global demand for crude is expected to slow from 2025 as global steps to cut greenhouse gas emissions are rolled out and the use of electric vehicles increases. If Aramco shares gain 10% on both Wednesday and Thursday, its valuation will surpass $2 trillion. The company is expected to be included in the MSCI emerging markets index on Dec. 17. Nick Note: A star is born. American capitalism has become corrupt and inbred. These sovereign wealth funds government controlled are the future. GOD help us all