The challenges of getting listed
As exciting as an Aramco IPO is, I wouldn’t put my full faith in it coming to fruition. For one, the Saudi Stock Exchange in Riyadh is simply too small and undeveloped to handle the massive trading volume the biggest IPO in history would require.
Getting listed in New York has its own challenges. Although President Trump is strongly urging Saudi Arabia to float shares on the New York Stock Exchange , the kingdom is concerned that doing so would open itself up to litigation. In 2016, a bill was passed allowing victims of 9/11 or their families to sue the Saudi Arabian government.
On Monday, the Financial Times reported that the London Stock Exchange (LSE) has made a “very strong case” for Aramco to get listed in the U.K. In April, Prime Minister Theresa May visited the kingdom, accompanied by the LSE chief executive, presumably to pitch the idea of a London IPO to Saudi officials. In addition, the LSE has sweetened the deal by announcing it would loosen certain rules and restrictions on Aramco that apply to other companies.
However this plays out, we’ll certainly continue to monitor it, as well as the oil market. Because of the drama in Saudi Arabia and further extended production cuts planned by the Organization of Petroleum Exporting Countries, Morgan Stanley just raised its forecast for the price of oil, estimating WTI to average $58 a barrel in the second quarter of 2018. It could be time for investors to consider oil equities again.