Discussion
Was pondering this earlier. I think the risk premia is far too high for most investors, the risk mainly coming NOT from oil prices but pace of Saudi reform. If you go loping off peoples heads or threatening to go to war with Canada (nearly); you look a bit dicy. Crucifixion for shorting the stock, no thanks.
Deteriorating outlook for Equities probably not helping, especially given the somewhat optimistic $2tr price tag.
Deteriorating outlook for Equities probably not helping, especially given the somewhat optimistic $2tr price tag.
From a technical perspective; the Aramaco shares lack opportunity leverage’able value. Its exceptionally difficult to lend Saudi shares; or get a enforceability opinion on any Saudi domestic bankruptcy close-out process (since all banking groups are running at 20,30 times leverage – after financial whizz bang sourcery – no one wants to hold non sellable collateral from loans). Being ineligible as any form of collateral for margin borrow or leverage building means the carry costs are going to be in orbit. You’d be better off taking shares in Ukrainian pig farms.
Porridge GTI said:
They’d float because there’s a new man at the helm who wants to redirect the economy. It’s all in the news.
But there's no guarantee that the money ends back up in the PIF / Monetary Authority for inward investment. They're talking about a Tesla buyout; which a helpful diversification - isn't going to help the locals much.Such a small proportion is going to be available to off shore investors the appropriation risks are too high (as has been said). You'll likely get rodded. Its like Bitcoin (loss potential is the same), but if Bitcoins tanks and you're quick to market you might get out with your trolleys on. You may never be able to sell the Aramaco shs, ever. Try getting that through a risk office.
stongle said:
From a technical perspective; the Aramaco shares lack opportunity leverage’able value. Its exceptionally difficult to lend Saudi shares; or get a enforceability opinion on any Saudi domestic bankruptcy close-out process (since all banking groups are running at 20,30 times leverage – after financial whizz bang sourcery – no one wants to hold non sellable collateral from loans). Being ineligible as any form of collateral for margin borrow or leverage building means the carry costs are going to be in orbit. You’d be better off taking shares in Ukrainian pig farms.
Wasn’t that the reason they were trying to list in the UK or in another friendly western exchange?NickCQ said:
Wasn’t that the reason they were trying to list in the UK or in another friendly western exchange?
There was due to be dual listing; but that doesn't solve the issue of a local statute change / they derecognise the foreign shares. Commercially, that's bad business (for Aramaco); but its impossible to get an enforceability opinion versus a foreign state (and its nothing but opaque down there on ownership structure). This wont be like doing a Rio Tinto / BHP deal. DRs wont solve anything (you'd have zero chain of local custody rendering the certs useless) - its a frikking legal nightmare doing business with or in KSA or Kuwait.
It will get down eventually, but these are going to be very difficult "risk" issues to resolve. They need to open up more first before doing this deal (fortunately for them - timing is off).
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