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Tadawul awaits new inflows after Aramco IPO

Tadawul awaits new inflows after Aramco IPO
Aramco could be listed on the MSCI index as soon as 17 December

By: Bedour Alraee

Riyadh – Mubasher: A number of market experts are expecting relatively low liquidity in the Saudi Stock Exchange (Tadawul) until the conclusion of the Saudi Aramco initial public offering (IPO).

We see traded values maintaining their low levels in the next couple of sessions, despite the rise of the benchmark index, said market analyst Mohamed Al Maymounni.

However, lower liquidity could make more investors very cautious, especially in anticipation for the next OPEC+ summit, held on 4-5 December. With a few days left until the IPO is completed, the market awaits knowing more about the institutional investments as a signal to the market’s strength, the analyst added.

The Saudi market is currently enjoying moderate stability as well as expectations of new investments being attracted by the Aramco IPO, according to analyst Qassem Al Ali.

It is worth noting that emerging markets index, MSCI, recently revealed that if Saudi Aramco starts trading on or before 12 December, it would add it to the MSCI Equity Indexes from 17 December, a move after which Al Ali is forecasting new liquidity in the range of SAR 15 billion.

A recent report by Jadwa Investment expected increased swap deals and inflows from Qualified Foreign Investors (QFIs) after the Aramco IPO is completed.

 

Meanwhile, Saad Al Thaqfaan, market analyst and member of the Saudi Economic Association told Mubasher that after rising by around 3.5% in November, the last week saw a slight decline on the back of the IPO’s retail subscription affecting the market’s traded values, expecting horizontal movement by the benchmark index after the IPO with a turnover in the range of SAR 2 billion.

The Tadawul All Share Index (TASI) added 114.98 points, or 1.48%, in November as it ended the month at the level of 7,859.06 points, after declining by 2.52% last week.

Last month, market capitalisation increased to SAR 1.844 trillion ($491.8 billion), compared to SAR 1.818 trillion ($485 billion) in October.