Saudi Aramco IPO: Oil giant nears $2trn valuation despite climate fears - business live

Aramco, the world's biggest Co2 producer, is now world's largest listed company after floating today

• Newsflash: Stock surges 10% as trading begins
• Value jumps to $1.88trn, from $1.7trn
• Will investors heed environmental worries?
• Expert: Aramco will hit $2trn soon
• Introduction: Saudi Aramco shares are floating today

4.53pm GMT

And finally, the London stock market has ended a fairly uneventful day with many stocks little changed.

The FTSE 100 closed 2 point higher, or 0.03%, at 7216 - a really small move. Miners, utility companies, telecoms firms and healthcare stocks rose, but tech, energy and financial stocks fell.

The US-China trade situation is still at the forefront of traders' minds. The Sunday deadline in relation to the US tariffs on $150 billion worth of Chinese imports is looming, and the lack of clarity has brought about low volatility in stocks. When it comes to the trade saga, it's the same old story - there is talk the planned tariffs will be deferred.

It is possible the US might not slap on new levies, but in return they will be looking for Beijing to pledge to ramp up agricultural purchases.

3.47pm GMT

Newsflash: The oil price is falling sharply, following a surprise rise in US crude stocks.

US oil inventories rose by 822,000 barrels, defying expectations of a 2.8m drop.

Oil taking a battering on these inventory numbers. Build of 822k barrels v -2.7m expected fall. pic.twitter.com/qYTMLFrsvP

3.43pm GMT

Astonishingly, Saudi Aramco is now worth more than the combined value of every company on Germany's DAX index.

It's just one stock (Aramco) and only a tiny portion of it gets traded, but still, as far as market capitalizations go....

Saudi Arabia is now the world's 7th biggest stock market@theterminal #Aramco pic.twitter.com/wRS5kSUVgt

3.33pm GMT

We mentioned earlier that only 1.5% of Aramco's shares were floated.

That boosts the company's value in two ways. First it creates scarcity, so investors who HAVE to own the company (such as a tracker fund) pay more.

How much it cost to move Aramco share price? No much. According to @TheTerminal data, Aramco saw a volume of ~31.6 million shares. Multiply by 35.20 riyals per share, and you get ~$297 million. So, $300 *million* caused a valuation upside of $188 *billion* as Aramco rallied 10%

2.26pm GMT

Bloomberg have written a nice piece about how Wall Street put a spanner into the wheels of the Aramco IPO, by refusing to accept that it could be worth $2trn.

LONG-READ: The story of the last few months of the #AramcoIPO, when Wall Street told the Saudis that foreign investors wouldn't value Aramco at $2 trillion | #OOTT #SaudiArabia with @DNair5 @mideastmatthew @wenkennedy https://t.co/OyxOVLl0te

2.24pm GMT

Given the international wariness over Aramco, Saudi officials are clearly pleased to have pulled off the float.

Energy minister Prince Abdulaziz bin Salman says it is 'vindication' for the authorities:

"It's a great day for Saudi Arabia and the leadership of Saudi Arabia and for the people of Saudi Arabia.

It's a D-Day for Aramco, it's a day of reckoning and vindication."

2.12pm GMT

The Saudi stock market has now closed, with Aramco finishing its first day exactly 10% higher (the maximum daily move at 35.2 riyals.

That lifts its valuation from $1.7trn to $1.87trn.

Despite 10% rise in the price of stock, the demand for Aramco stocks is extremely strong with limited amount available for sale. #AramcoIPO pic.twitter.com/A1ErfXs4N1

Given the extraordinary demand for Aramco stocks, Aramco market cap might reach the $2 trillion in matter of days (Weakened is Friday and Saturday). It stands now at $1.88 trillion

Because of the massive demand, sellers are holding out. pic.twitter.com/4s3WGLILGJ

2.08pm GMT

Core CPI has climbed at least 2.3% YOY for the past four months, the first time that's happened since September 2008.

Funny to think we were more worried about deflation at the beginning of this year.

1.38pm GMT

NEWSFLASH: US inflation has hit its highest level in a year.

Consumer prices rose by 2.1% per year in November, up from 1.8% in October, partly due to rises in energy, rent and gasoline bills.

INFLATION WATCH: U.S. consumer prices rise 0.3% in November. Core CPI (minus food & energy) up 0.2%. Yearly increase in overall CPI climbs to 2.1% from 1.8%. Highest in a year. Core rate flat at 2.3%. Inflation bubbling higher?

1.17pm GMT

Pre-election jitters also appear to be hitting UK stocks.

The FTSE 250 index of medium-sized listed companies is down 1% today, with every sector in the red. It's a better barometer of UK economic prospects than the FTSE 100 (which is broadly unchanged today).

12.32pm GMT

The possibility of another hung parliament is keeping a lid on the pound today.

Sterling is unchanged today at $1.315 against the US dollar, having fallen sharply from around $1.32 when last night's YouGov poll showed the Conservative's likely majority had shrunk.

The sharp selloff in the pound gives us a taste of what could be to come. Should the Conservatives win an overall majority, sterling gains are expected to be less pronounced than in the case of a hung Parliament or a Corbyn victory.

These are outcomes which are considered less market friendly either due to the Brexit impasse continuing or in the case of a Labour government, economic policy concerns. There would be a less pronounced gain on a Tory majority because the market is anticipating this outcome; a market friendly outcome.

11.44am GMT

Aramco has broken the US and China's grip on the chart of biggest companies, going straight in at number one.

Most of the rest of the top 10 are tech stocks, along with Wall Street giant JP Morgan and Warren Buffett's Berkshire Hathaway group.

11.38am GMT

Aramco is now TWICE as valuable as Amazon, the e-commerce giant (currently worth $862bn).

And this morning, Amazon's efforts to take a stake in food delivery group Deliveroo have taken a knock - regulators think the plan would hurt customers.

Related: Amazon investment in Deliveroo could lead to higher prices, says CMA

11.36am GMT

Aramco's sparkling market debut is "a piece of rare good news for Bin Salman's embattled project to transform his country's society and economy".

That's according to the Britain Israel Communications and Research Centre, which writes:

One of the major obstacles for Aramco was the very high valuation at $2 trillion, which officials were forced to bring down to $1.7 trillion.

Early evidence of trading suggests that this $2 trillion mark will be reached, helping to provide some of the funds the Saudi royal family needs to wean the country off its oil dependence

11.16am GMT

Jasper Lawler of London Capital Group suspects Aramco may struggle to justify its huge valuation, as the world moves beyond fossil fuels:

A listing in Riyadh with mostly domestic investors doesn't have the prestige of an international listing in New York or London. But there is no denying the numbers. Saudi Arabia has made its mark in public markets.

The listing was over four times subscribed so the first day always looked like it was going to be strong. Whether enthusiasm holds up longer term will in part rest upon the host nation's ability to stay relevant for the world's future energy needs. The oil industry needs to adapt to higher supply from the United States and calls for lower fossil fuel use because of climate change. Given the challengers, it is not impossible that this is the high watermark for Aramco.

10.59am GMT

Back in the UK, holiday and insurance group Saga has turned to the former boss of fashion chain SuperDry.

Saga, which targets over-50s consumers, hopes that Euan Sutherland (42) can revitalise its fortunes after seeing shares tumble this year.

Saga will be the latest struggling company on Sutherland's CV. In 2013 he was appointed as the boss of the Co-operative Group but quit after 10 months. He had reportedly earned the moniker "Pol Pot", after the Cambodian dictator, from colleagues who thought he was pushing for change too quickly.

Sutherland has previously also served as head of the DIY retailer B&Q and is on the board of the Robinson's drinks maker, Britvic.

Related: Over-50s specialist Saga appoints former Superdry boss as CEO

10.49am GMT

Aramco's stock hasn't shifted since it surged 10%, the maximum allowed, at the start of trading.

That suggests there's still strong buying interest among investors in Riyadh, so the stock could rally again tomorrow.

10.33am GMT

Here's my colleague Jasper Jolly on the Aramco float:

Saudi Aramco has become the world's largest listed company, as shares in the state-backed oil producer rose by 10% on its stock market debut in Riyadh.

The company's market valuation reached $1.88tn in early trading, amid a push from the Saudi Arabian government to reach the $2tn market value coveted by Crown Prince Mohammed bin Salman, known as MbS.

Related: Saudi Aramco shares soar as it becomes world's largest listed company

9.41am GMT

Saudi Arabia's finance minister has claimed that the Aramco float will help the Kingdom break its dependency on oil, and develop its economy.

Finance Minister Mohammed al-Jadaan told Reuters that the most of the $25.6bn raised through the IPO will go to Saudi's sovereign wealth fund (PIF), which is trying to diversify its economy.

"The proceeds will be used largely, maybe not totally, in the local economy, in projects where the PIF will be the first mover which then basically pulls more private sector participation ... so the money will remain in the system mostly."

9.23am GMT

Here's a reminder that Saudi Arabia has only sold a tiny slice of Aramco, just 1.5% of its stock.

This Aramco flee float is quite something....not sure what to say @youseftv pic.twitter.com/vTPdDmOQlM

Ahead of Aramco's debut on the Tadawul today, here's a look at where we stand:
-Pricing: 32 riyals per share ($8.53USD)
-Raise: $25.6bn (Greenshoe: $28.75bn)
-Initial valuation: $1.7 trillion USD
-Initial offer size: 1.5 percent (0.5% retail)#AramcoIPO pic.twitter.com/shJK3ArSTj

9.01am GMT

Professor John Colley, Associate Dean at Warwick Business School, reckons Aramco's value will keep rising.... perhaps thanks to allies of the Saudi royal family:

"One senses that the Crown Prince will get his own way in the end with a $2 trillion valuation for Saudi Aramco.

"It has been his determination since the very idea of an IPO was mooted. Despite much contrary advice from his advisors that the business was only worth between $1.2 and $1.5 trillion, he has pressed ahead.

8.59am GMT

Aramco's role as the top CO2 producer could (indeed should) deter some investors from taking a stake, if they take the climate emergency seriously.

Andy Critchlow of S&P Global Platts says fund managers will have environmental, social and corporate governance concerns:

Heading into London to talk #AramcoIPO on @CNBC. According to @SPGlobalPlatts news team calculations the world's largest listed company produces 1.6 billion tons of CO2 annually. Hard for international fund managers to ignore. #ESG pic.twitter.com/CktN5rDy6m

8.25am GMT

The boss of Aramco, Amin Nasser, is understandably happy about today's float.

CNBC's Emma Graham reports:

Aramco CEO Amin Nasser tells reporters in Riyadh "we are happy with the results today & we have seen the market response.. We continue to be the leader globally when it comes to the energy sector & at same time we are looking at sustained & growing dividends to our investors."

8.24am GMT

As well as being the world's most valuable company, Aramco is also one of the biggest contributors to the climate crisis.

Aramco heads the list of the 20 fossil fuel companies who have created more than one-third of all greenhouse gas emissions in the modern era.

8.11am GMT

One of the best things about floating a company (apart from getting all that money) is being allowed to ring the opening bell.

And Aramco certainly got the full works this morning, at a ceremony to mark its debut on the Tadawul:

7.57am GMT

Here's Associated Press's take:

Saudi Arabia's oil company Aramco is listed and started trading on the Saudi Tadawul stock exchange on Wednesday for the first time after a mammoth $25.6 billion initial public offering that set the record as the biggest ever in history.

The state-owned company had announced a sale of 1.5% of its shares at 32 Saudi riyals a share, or what is $8.53.

BREAKING: Saudi Arabia's oil company Aramco is now listed and has started trading on the Saudi Tadawul stock exchange for the first time after a mammoth $25.6 billion initial public offering that set the record as the biggest ever in history. https://t.co/lmRFzz7wkq

7.56am GMT

The world's most valuable public company now trades not in New York, but Riyadh, and it's valued at $1.88 trillion. Whatever your views on the IPO, that's pretty extraordinary. #AramcoIPO

7.48am GMT

Bloomberg's Javier Blas points out that Aramco's float is being driven by local demand, with overseas investors keeping away....

Saudi Aramco rises by the 10% daily limit of the Riyadh stock exchange, giving it a valuation of $1.88 trillion as local money rushes to buy shares. Foreign investors (with exception of UAE and Kuwait) had been almost completely absent from the #AramcoIPO pic.twitter.com/iSyAovX1VS

7.44am GMT

Saudi Aramco is now worth $1.87 trillion, based on this morning's spike.

7.39am GMT

The chairwoman of the Saudi stock market has confirmed that Aramco has become the world's largest listed company.

Reuters has more details:

Sarah al-Suhaimi was speaking at a ceremony marking the initial public offering (IPO) of the stock on the exchange in Riyadh.

She added that the exchange will also become one of the world's largest due to the listing.

7.37am GMT

Boom! Aramco's shares have opened 10% higher as investors in Saudi Arabia rush to buy shares in the oil giant.

This has driven the stock up to 35.2 riyals, the maximum move allowed, up from the 32 riyal IPO price.

7.31am GMT

The word on the Tadawul trading floor is that Aramco's stock could indeed spike by 10% once the pre-market auction gets underway.....

7.29am GMT

Given the importance of Aramco to the Saudi authorities, it's quite likely that today's IPO will go well.

As Zachary Cefaratti, chief executive officer at Dalma Capital Management Ltd, told Bloomberg:

"It's likely that we will see Aramco bid up to $2 trillion [valuation] or higher in the first days of trading, and potentially to trade limit up on the first day.

7.22am GMT

It's worth noting that shares on the Saudi stock market are only allowed to rise or fall by 10% per day. There's a limit to how well, or badly, Aramco can do.

7.06am GMT

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

It was originally expected to sell about 5% through a dual-listing on the Saudi market and on a major international stock exchange.

The IPO lost the support of international investors, which are sceptical of the company's valuation. Investors are also wary of Aramco's close ties to the Saudi regime, which is embroiled in geopolitical conflict and whose behaviour has raised human rights concerns.
Among local investors demand for Aramco shares was almost three times oversubscribed after the Saudi government encouraged Middle Eastern investors and wealthy Saudi families to support the IPO.

Related: Saudi Aramco to be world's most valuable firm after IPO next week

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