Saudi oil giant Aramco's IPO a roaring success

The Saudi oil company Aramco made its stock market debut on Tuesday and has replaced Microsoft and Apple as the most valuable company in the world. Saudi Arabia plans to use the proceeds from the sale of the state-owned company's shares to finance economic reforms aimed at reducing its dependence on oil. Commentators have their doubts about whether investors will play along.

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Handelsblatt (DE) /

A dirty but attractive investment

Handelsblatt explains why the demand for Aramco shares is so strong:

“The Saudi oil giant controls a fifth of the world's oil reserves and operates more profitably than its competitors. In addition, it offers price potential simply because its stock has a good chance of entering the world's leading stock indexes ... Of course, despite this list of advantages, there are many arguments against buying 'dirty' oil stocks. But those thinking of putting money in oil companies would do well to snatch up these stocks.”

Eco - Economia Online (PT) /

Investment in human rights abuses

Despite the good numbers there are clouds on the horizon, remarks Eco - Economia Online:

“Saudi Arabia is a region known for the absence of human rights. Take last year's murder and dismemberment of journalist Jamal Khashoggi. It is a place with a long list of cases of persecution for religious, ethnic and other reasons. Companies are increasingly factoring moral criteria into the decisions about their investments. This could lead to a relevant number of financial actors refusing to participate in this dispersion of capital, and that could lead to a drop in demand for [Aramco] shares.”

The Guardian (GB) /

Plainly overvalued

The Guardian disagrees with the decision to value Aramco at 1.7 trillion US dollars in its IPO and sees Saudi Arabia facing a fundamental problem here:

“It still needs to get rid of far bigger chunks of Aramco to fund a diversification of the economy, and international investors will be required eventually. Those investors, though, are unlikely to be impressed by a stage-managed exercise in pumping up the valuation. ... The Saudis will hope scepticism will fade over time, but it's hard to see why it should: Aramco looks plainly overvalued.”