Riyadh – Mubasher: Despite the expected unfavourable consequences that could follow a reported suspension of Aramco’s planned initial public offering (IPO), Saudi stocks can finally breathe a sigh of relief.
The potential IPO will – undoubtedly – boost the global position of the kingdom’s economy, upping its rating among emerging markets, but it could also drain the Saudi Stock Exchange (Tadawul) of liquidity.
“Our biggest concern would be a drain of liquidity, because you would see a lot of investors selling off their shares in order to fund their applications for the IPO,” Fahd Iqbal, head of Middle East research at Credit Suisse Group AG told Bloomberg TV.
Earlier in August, unofficial sources told Reuters that Saudi Arabia had cancelled its mega IPO for Saudi Aramco, which was considered the largest IPO in history and which valued the giant oil firm at $2 trillion.
On Thursday, 23 August, Saudi Arabia denied these reports, while its energy minister Khalid Al-Falih said that “the [Saudi] government remains committed to the IPO of Saudi Aramco at a time of its own choosing when conditions are optimum.”
On Monday, the London-based news agency said that Saudi Arabia has decided to halt the local and international IPOs for state-run Aramco.