RIYADH: Saudi Arabia’s stock exchange will ensure the weighting of national oil giant Saudi Aramco in its main stock index is not too large when the company lists its shares, the exchange’s chief executive said on Wednesday.
“We have technical ways to address this issue,” Khalid Al-Hussan told the Euromoney business conference, adding that one step might be to impose an “index cap” on Aramco . He did not elaborate on how such a cap might work.
Saudi authorities plan to sell 5 percent of Aramco’s shares and list the firm in Riyadh and possibly one or more foreign markets this year or next, as part of wide-ranging reforms designed to reduce the Saudi economy’s reliance on oil.
The Saudi exchange’s ability to cope with such a huge listing, which could involve the world’s biggest initial public offer of equity, is a major concern among investors.
The local stock market currently has a capitalization of about $500 billion, while officials have said the sale is expected to value the whole of Aramco at about $2 trillion.
Petrochemical shares already account for around a quarter of the market’s capitalization, so with Aramco, the market could become dominated by oil-related shares and end up moving almost entirely in synch with oil prices, unless steps are taken.
Hussan reiterated previous statements that the exchange had tested its technical systems and these, as well as the regulatory environment, were ready for the Aramco listing.
In the past, the exchange has said it hopes to be the only market in the world to list Aramco shares. The government has not said whether this will be the case and Hussan did not discuss that matter on Wednesday.
The exchange announced on Wednesday the creation of a central counterparty clearing house with capital of 600 million riyals ($160 million) to handle securities trading.
The clearing house, to operate fully by the second half of 2019, will reduce risk in settlements and enable the introduction of new asset classes such as derivatives, the exchange said. It aims to introduce derivatives in the second half of 2020.
Foreign institutions were allowed to begin investing directly in the Saudi stock market in mid-2015, and there are now 140 qualified foreign investors, with over 40 percent of them registered in the last quarter, said Mohammed El Kuwaiz, chairman of the capital market regulator.
He said his priorities for the coming year would include the listing of new companies on the stock market, including privatised firms; strengthening external and internal audits for listed firms to improve the quality of the market; and developing a corporate bond market
Saudi Arabian bourse to ensure Aramco’s weighting in index is not too big
Saudi Arabian bourse to ensure Aramco’s weighting in index is not too big
- Saudi authorities plan to sell 5 percent of Aramco’s shares and list the firm in Riyadh and possibly one or more foreign markets this year or next
- The Saudi exchange’s ability to cope with such a huge listing is a major concern among investors
Mexico eyes trade expansion, targets Saudi market with premium rice exports
RIYADH: Mexico is preparing to expand its trade ties with Saudi Arabia by exporting high-quality rice to the Kingdom, sources told Asharq Al-Awsat.
They said Mexico has an export offer for three premium rice varieties that meet the highest international standards.
Saudi Arabia imports limited quantities of Mexican rice, mainly for use in Mexican cuisine and in restaurants.
The latest initiative reflects the Kingdom’s position as one of the world’s largest rice consumers, with per capita consumption averaging 45.77 kilograms annually, the highest among plant-based food products.
Around 70 percent of consumption consists of basmati rice, while total annual imports exceed 1.3 million tonnes.
According to information obtained by Asharq Al-Awsat, the Saudi Ministry of Foreign Affairs received a request from the Mexican Embassy in Riyadh conveying the interest of the Mexican state of Nayarit in exporting premium rice to the Saudi market.
The embassy said that three rice varieties are available for export, including Super Extra Whole Grain Rice, long grain, with a monthly supply of 120 tonnes; Milagro Super Extra Rice, polished broad grain, with a capacity of 30 tonnes per month; and Morelos rice, a premium-grade variety.
Saudi Arabia has previously taken steps to encourage private-sector imports of Cambodian rice in a move aimed at diversifying supply sources alongside imports from India, Pakistan, the US, and Egypt.
Strong demand for favored rice varieties in Saudi Arabia and across the Gulf, combined with challenges such as rising shipping costs and climate-related disruptions, has occasionally led to price fluctuations. These factors have prompted the Kingdom to broaden its supplier base to ensure the availability of this commodity and maintain price stability.
The government recently decided to increase Pakistani rice imports to account for 20 percent of total needs, reinforcing supply stability and food security.
Forecasts suggest that per capita rice consumption in Saudi Arabia could rise to around 50 kg annually in the coming years, up from the current 45.77 kg, underscoring rice’s central role in the Kingdom’s food industry and traditional cuisine.
