Saudi Aramco shares shed post-IPO gains as oil prices drop

RIYADH: Saudi Aramco shares have lost most of the gains they made since listing in December in a landmark first offering, as oil prices drop amid alarm over the new coronavirus.

China’s energy demand has sagged as authorities lock down millions of people to prevent the spread of the disease, with major knock-on effects for a global economy dependent on the Asian powerhouse.

The slump, which has slashed main oil contracts by up to 20% since the virus panic began, threatens to undercut Gulf economies that have already been battling both low prices and low demand for energy exports.

A high-profile casualty is Saudi Aramco – the world’s largest company – which was listed on the Saudi bourse to much fanfare on Dec 11 in a recordbreaking initial public offering (IPO).

The company raised US$25.6 billion with the sale of 1.5% of its stock, with one-third of the shares sold to some five million Saudi citizens who were promised a 10% bonus if they did not sell them for six months.

The value of the IPO was further raised to US$29.4 billion in early January when the company sold some 450 million extra shares to investors.

The stock surged almost 19% in the heady first few days of trading, sending the company’s valuation past the US$2 trillion mark sought by de facto ruler Saudi Crown Prince Mohammed bin Salman when he envisaged the IPO four years before.

But over the past weeks, the share price posted gradual but persistent declines, coming close to the IPO price of 32 riyals (RM18.77) a share.

On Sunday, it closed at 32.80 riyals, the lowest price since the listing, which reduced the firm’s value to US$1.75 trillion. – AFP