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Hong Kong Exchange Chief Confident Aramco Will List There

Hong Kong Stock Exchange

Saudi Aramco will eventually pick the Hong Kong Stock Exchange for its international listing, the bourse’s chief executive Charles Li told CNBC. He said that Hong Kong would make more sense than London, Tokyo, or New York—the other three exchanges on Aramco’s short list—because it would provide the company with access to Chinese investors.

Even if Hong Kong doesn’t make the cut for the initial offering, Li is confident that Aramco will decide in favor of a secondary international listing there.

"A deal in Hong Kong with the possibility of accessing, either now or later, the Chinese investing public works wonders for Saudi Arabia, for China, for Hong Kong and for everybody else," Li said. "So, I don't see any reason why it shouldn't be here, it may not be here right away, it may not be here on the first go, but it will be here."

Last year, London emerged as a favorite over the New York Stock Exchange, because of litigation risks after Congress passed a post-9/11 law allowing U.S. citizens to sue Saudi citizens, and concerns over how the OPEC production cut deal could be construed as price fixing, which is illegal in the United States. Hong Kong and Tokyo have garnered less attention in the media.

Related: Largest Oil Consumers Not In A Rush To Hedge Crude

Earlier this month, Riyadh took a decisive step towards the IPO, which is scheduled for the second half of this year, by making Aramco a joint stock company in preparation for its initial public offering. The company has a fully paid capital of US$16 billion (60 billion riyals) divided into 200 billion ordinary shares, and a board of eleven directors who will be in charge of the company’s listing.

There have been doubts whether Riyadh will make the IPO’s deadline, which is supposed to value the world’s biggest oil company in terms of reserves at between US$1 and 2 trillion, though some external valuations peg its value much lower. However, government and company officials are toeing the line, insisting that everything is going as planned and that all potential listing destinations are still being discussed.

By Irina Slav for Oilprice.com

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  • Mamdouh G Salameh on January 24 2018 said:
    I advise Saudi decision-makers to withdraw the Initial Public Offering (IPO) of Saudi Aramco. Saudi Arabia hopes that the IPO will bring it some $100 bn towards the fulfilment of its Vision 2030. But the Saudi government could get that sum from the total elimination of subsidies or a bit less by reaching a peaceful settlement in Yemen.

    Saudi Aramco is the jewel in the crown in the Saudi oil industry. It is a world class company in terms of technology, reach and proven reserves. Keeping it totally under Saudi ownership enables Saudi decision-makers to decide oil policy and the freedom of global investments without any foreign interference and without any risk of litigation by the United States.

    I sincerely hope that Saudi decision makers will heed my advice.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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