Good day monkeys,
By now, we have probably all known about the planned IPO of Saudi Aramco, the potentially biggest IPO ever in the history of global stock markets. Although the IPO is planned to take place in October 2018, I think it's interesting to think about which stock exchange will win this "legendary battle" over Saudi Aramco. Here is what we have known so far (Source: CNBC)
Saudi officials have said they expect an IPO to value Aramco at around $2 trillion. If the market agrees, selling just 5% would raise $100 billion -- four times as much as Alibaba's (BABA, Tech30) IPO in 2014, the largest to date.
Nasser (Saudi Aramco's President and CEO) said he was looking at all the major markets, including New York, London, Hong Kong and Tokyo.
My two cents:
- London Stock Exchange: is going through numerous headwinds currently due to Brexit. The number of listings is going down as companies are falling prey to takeovers. As a result, there will be a lot of negotiating power for Saudi Aramco. However, the level of uncertainty may shy away the oil giant, especially if Brexit is not untangled by 2018 IPO.
- NYSE: seems like a no-brainer. However, there are ongoing political and legal risks that may make it a tough sell. Also, given the secretive nature of Saudi Aramco, the NYSE's strict regulation is admittedly a high barrier.
- Hong Kong Stock Exchange: may be the underdog. Although it is much smaller than LSE and NYSE, it is the gateway to mainland China. China is increasingly becoming globalized through its inclusion in the SDR basket, its Stock and Bond Connect programs, and the presence of its A-shares in the MSCI Emerging Markets Index. Although the regulation around IPO subscription in the Stock Connect program is currently a barrier, Saudi Aramco may strike a good deal by 2018.
- Tokyo Stock Exchange: is a possibility although the chance is said to be low. It has not been a popular choice for foreign listings (currently sitting at 6 listings). Given the enormous effect of having the oil giant listed on its stock exchange, Japan will likely go great length to increase its position on the global market.
Given what we know and the ongoing global uncertainties, any guess seems to be highly speculative.
Any thoughts to clear up the future, monkeys?