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Aramco shares dip on day of MSCI, Tadawul indices inclusion

A man walks at the Saudi Stock Exchange (Tadawul) following the debut of Saudi Aramco's initial public offering (IPO) on the Riyadh's stock market, in Riyadh, Saudi Arabia, December 11, 2019. REUTERS/Ahmed Yosri

DUBAI (Reuters) - Saudi Aramco’s shares opened at 37.5 riyals ($10.00) on Wednesday, down 0.66% from Tuesday, on the first day of their inclusion into the MSCI emerging markets index, and shed further value in the first hour of trading, losing 2%.

The oil giant’s shares on Wednesday were also included into the Tadawul index, down 0.25% in early trade, with Aramco’s 12% weight following Al Rajhi Bank, which had the largest weighting at almost 14%.

State-owned Aramco listed on the Saudi exchange last week having raised $25.6 billion in the largest initial public offering (IPO) on record.

As a precautionary measure, the Saudi exchange Tadawul introduced an equity index cap of 15% earlier this month, to limit the risk for the market of any security representing a large percentage of the index, as well as limiting the index’s correlation to the oil price.

Aramco’s shares, priced at 32 riyals, rose to a maximum limit of 10% on their first day of trading, and have risen about 1.6% since their closing level on Dec. 11, losing momentum on Tuesday for the first time since the listing.

Two market sources said Aramco’s losses on Wednesday were probably due to profit taking after the MSCI inclusion.

Dubai-based Arqaam Capital estimated the MSCI inclusion to amount to about $710 million in passive inflows.

On Thursday, the shares will also join global benchmark FTSE, with inflows estimated at about $400 million, according to Arqaam.

($1 = 3.7500 riyals)

Reporting by Davide Barbuscia; editing by Jason Neely and David Evans