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Saudi Aramco to Raise $11.2 Billion in Major Stock Offering

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Saudi Aramco is poised to raise at least $11.2 billion through a significant stock offering, the largest global deal of its kind in three years.

This strategic initiative is designed to support the Saudi government’s ambitious plans to transform the kingdom’s economy.

The government plans to sell nearly 1.55 billion shares at a price of 27.25 Saudi riyals ($7.27) each, insiders revealed on condition of anonymity.

This pricing represents a 6% discount from the stock’s last close of 29 riyals prior to the announcement.

Despite being in the lower half of the anticipated range of 26.70 to 29 riyals, the shares have been trading below the top end since the announcement. They closed at 28.30 riyals on Thursday, having hit a year-low earlier in the week.

This secondary offering is a rare event in the region, with previous similar deals involving Saudi Telecom Co. and Tadawul Group Holding, both of which were priced at roughly a 10% discount.

The high demand for shares was evident within hours of the books opening on Sunday, with significant interest from foreign investors.

Although exact figures on overseas demand were not disclosed, it was reported that foreign bids were sufficient to fully cover the offering.

This marks a notable shift from Aramco’s initial public offering (IPO) in 2019, where global investor participation was minimal, forcing the government to rely heavily on local investors.

This time, the substantial foreign interest underscores a renewed confidence in the Saudi market, even as the global oil outlook remains uncertain due to fluctuating supply and demand dynamics, particularly from China.

A major selling point for this offering is Aramco’s impressive $124 billion annual dividend, the largest globally, making the stock highly attractive despite being priced higher than major Western oil companies.

The dividend alone exceeds the combined returns of the next eight largest payouts worldwide.

The Saudi government, led by Crown Prince Mohammed bin Salman, is leveraging this stock sale to fund its Vision 2030 economic diversification plan, aimed at reducing the kingdom’s dependency on oil revenue.

The International Monetary Fund (IMF) has indicated that Saudi Arabia needs oil prices to be around $100 per barrel to support its ambitious spending plans. Currently, crude oil prices hover around $83 per barrel, with recent dips below $80.

The kingdom remains the principal shareholder of Aramco, holding about 82% of the company, while the Public Investment Fund (PIF) retains a 16% stake.

This sale will not alter the government’s majority ownership.

The share sale is being managed by SNB Capital, with Citigroup Inc., Goldman Sachs Group Inc., HSBC Holdings Plc, JPMorgan Chase & Co., Bank of America Corp., and Morgan Stanley acting as joint global coordinators. M. Klein & Co. and Moelis & Co. are serving as independent financial advisers.

This major stock offering is not just a financial maneuver but a pivotal component of Saudi Arabia’s broader strategy to reshape its economic landscape and secure a more diversified and sustainable future.

The final pricing will be announced on Friday, setting the stage for a new chapter in the kingdom’s economic evolution.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Nigerian Exchange Limited

Foreign Equity Trading in Nigeria Jumps 437%, Reaches N334 Billion in Early 2024

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Nigerian Exchange Limited - Investors King

Nigeria’s stock market has seen a remarkable surge in foreign investor activity, with equity trading by foreign investors skyrocketing 437% in the first four months of 2024.

This growth has pushed the total value of foreign equity trades to N334.01 billion, a significant increase from N62.18 billion during the same period in 2023.

Data from the Nigeria Exchange Limited (NGX) reveals that between January and April 2024, Nigerian stock investors exchanged equities valued at N1.894 trillion, a sharp rise from N721.44 billion recorded in the corresponding period of the previous year.

Foreign investors accounted for 17.63% of this total, while domestic investors dominated the market with 82.37%, trading N1.560 trillion worth of equities.

The increased foreign participation peaked in April 2024, with foreign investors trading N120.83 billion worth of stocks, representing 34.90% of the total value traded that month.

This surge highlights a growing confidence in Nigeria’s equity market despite broader economic challenges and a competitive fixed income market.

Analysts attribute this spike in foreign equity trading to various factors, including attractive stock valuations and improved regulatory frameworks.

“We expect continued interest in fundamentally sound stocks,” noted analysts at Comercio Partners, highlighting the positive market return of 33.64% by mid-June 2024.

Despite the attractiveness of fixed-income yields, particularly with Treasury bill rates reaching as high as 23.3% for one-year T-bills, participants remain drawn to equities, seeking growth in undervalued stocks.

Meristem research analysts predict a mixed performance in the equities market, driven by positive momentum and cautious trading.

The influx of foreign capital comes as a positive sign for Nigeria’s economic outlook, reflecting investor confidence in the nation’s regulatory and market reforms.

The NGX has been proactive in boosting market accessibility, recently launching a USSD platform to provide real-time stock market information, a move aimed at enhancing financial inclusion and market participation.

Prominent stockbroking firms have also played a crucial role in this trading boom.

CardinalStone Securities Limited led the market by trading stocks worth N197.535 billion, followed by Stanbic IBTC Stockbrokers Limited and United Capital Securities Limited.

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Nigerian Exchange Limited

Stock Market Rises by N398 Billion Last Week as Investors Target Key Sectors

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Nigerian Exchange Limited - Investors King

In a holiday-shortened trading week ending on Friday, June 14, Nigeria’s equities market saw a notable increase, rising by 0.71% or N398 billion.

This boost came as investors focused their buying on key sectors such as oil & gas, banking, insurance, and consumer goods.

The Nigerian Exchange Limited (NGX) All-Share Index (ASI) increased from the previous week’s 99,221.14 points to 99,925.29 points, while the Market Capitalisation rose from N56.128 trillion to N56.526 trillion.

This surge pushed the year-to-date (YtD) return higher to 33.64%, with a month-to-date (MtD) increase of 0.62%.

Leading the sector gains was the NGX Oil & Gas Index, which jumped by 5.28%, reflecting robust investor interest in the sector.

The NGX Banking Index followed with a 3.63% rise, demonstrating confidence in the financial sector.

Similarly, the NGX Insurance Index climbed by 3.42%, and the NGX Consumer Goods Index saw a 1.05% increase. The NGX Industrial Index also edged up slightly by 0.27%.

This upward movement in the stock market comes amid a backdrop of cautious optimism.

The holiday-shortened trading week provided a condensed period for trading, yet investors were keen to seize opportunities, particularly in sectors that have shown resilience and potential for growth.

Analysts suggest that the targeted investments in these key sectors indicate a strategic approach by investors to balance portfolios and capitalize on sectors poised for growth.

The oil & gas sector, in particular, has been buoyed by fluctuating global oil prices and local policies aimed at boosting production and refining capacity.

The banking sector’s performance reflects ongoing reforms and the potential for increased financial activities as the economy continues to stabilize.

The rise in the stock market is a positive signal for Nigeria’s economic outlook, indicating renewed investor confidence.

However, experts caution that sustained growth will depend on continued economic reforms, political stability, and global market conditions.

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Nigerian Exchange Limited

Equity Market Rebounds by N144bn, Led by Nigerian Breweries and NEM Insurance

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Stock - Investors King

The Nigerian equity market surged by N144 billion on Thursday, largely on the strong performances of key players like Nigerian Breweries and NEM Insurance.

This recovery comes after the market experienced a dip earlier in the week.

The market indices closed with the All Share Index (ASI) rising by 0.2% to settle at 99,832.25 points, while market capitalization increased to N56.47 trillion.

Despite lower trading volumes and values compared to previous sessions, the market saw increased activity in terms of the number of deals, which rose by 20% to 9,686.

Market Activity and Performance

Trading on Thursday resumed following the Democracy Day holiday, with 502.6 million shares exchanged in various deals valued at N8.65 billion.

The bullish trend was evident with 30 gainers outnumbering 18 losers, highlighting the positive sentiment that dominated trading.

Top Gainers and Losers

Nigerian Breweries emerged as a top performer with a significant 10% increase in its share price to close at N31.90. Unity Bank followed closely with a 9.91% gain, closing at N1.22 per share, while NEM Insurance recorded a 9.77% increase, ending the trading session at N9.55 per share.

Conversely, Ecobank Transnational led the losers’ chart with a 9.92% decline, closing at N21.35 per share. Daar Communications and C&I Leasing also experienced losses, shedding 8.77% and 7.14% respectively.

Trading Insights

Zenith Bank emerged as the most traded stock by volume, with 71.2 million shares exchanged, followed by AIICO Insurance with 67.3 million shares and Access Holdings with 58.5 million shares.

The trading activities were spread across various sectors, with notable gains observed in the insurance, banking, pension, and consumer goods industries.

Market Outlook

The rebound in the equity market reflects renewed investor confidence following recent downturns. Analysts anticipate continued volatility amid global economic uncertainties but remain optimistic about the resilience of Nigerian stocks in the long term.

Overall, the market’s recovery by N144 billion underscores the dynamism of Nigeria’s financial landscape and the strategic positioning of key market players like Nigerian Breweries and NEM Insurance in driving positive market sentiment and performance.

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