Saudi Aramco hopes to surpass Apple as the most
valuable corporation in the world when it eventually lists a 5% stake in
an IPO, which might happen later this year or in early 2023.
With Saudi Aramco projected to control almost
one-third of the index, the "unique" listing is anticipated to
significantly alter the Tadawul exchange. Despite the kingdom's long-term
intention to diversify the economy away from oil, it might enhance the
likelihood that Saudi stocks move in lockstep with oil prices.
According to Khalid Abdullah Al Hussan the CEO of
the Saudi Stock Exchange, what is set to be the largest initial public
offering (IPO) in history will fundamentally alter how Saudi Arabia's economy
So far, the only recognized listing exchange
for Saudi Aramco, the country's state-owned energy company, is Tadawul in Saudi
Arabia. The highly anticipated IPO of the largest oil corporation might be
valued up to $2 trillion, according to the Kingdom.
Abdullah Al Hussan told CNBC on Wednesday
that the Saudi Stock Exchange is as thrilled about the IPO of Aramco as
everyone else is.
Riyadh's exchange has been frantically working to
get ready for the upcoming IPO while several of the world's top stock exchanges
and governments have tried to urge Saudi Crown Prince Mohammed bin
Salman to list Saudi Aramco with the Tadawul.
As the country's stock market was given the go-ahead
to join FTSE Emerging Markets index in March, the Tadawul's progress
earned a much-needed boost. The permission is anticipated to bring billions of
dollars in additional foreign funds to Riyadh's exchange.
The kingdom is currently waiting to find out if the
prestigious MSCI benchmark equity index would designate it as an emerging
market. The Tadawul should be able to draw Western capital in addition to other
major investors across Asia, especially China, Japan, and South Korea
because a significant amount of money tracks emerging economies.
economy projected to grow at an average of 3.9% in the next 4 years’
According to credit rating company Moody's Investors
Service, Saudi Arabia's GDP would expand at an average pace of
3.9% between 2022 and 2026.
Moody's confirmed Saudi Arabia's rating at
"A1" with a stable outlook in its annual credit review, largely due
to the country's strong government balance sheet, which is supported by low
debt levels and sizable fiscal reserve buffers.
The research highlighted that the Kingdom's sovereign credit profile is further supported by the substantial "stock of proven hydrocarbon reserves" with cheap extraction costs along with a regulated banking system.
One of the difficulties Saudi Arabia faces is its
substantial economic and budgetary exposure to drops in global oil demand and
prices, as well as longer-term risks associated with the global transition to a
low-carbon economy and difficulties brought on by high unemployment rate.