3 hours ago
RIYADH: Saudi investors, who pulled out of their savings and borrowed to participate in the record placement of Aramco, were shocked after the sharp decline in Dora Crown shares in the wake of the collapse of the production-cut agreement between OPEC and its allies.
Aramco shares fell ten percent at the start of trading on Monday, to continue losses incurred the previous day, when it fell from the IPO price of 32 riyals. By 1050, the stock recorded 28 riyals, down 6.7 percent.
A record number of individual investors, amounting to 5.1 million, mostly Saudis, participated in the $ 29.4 billion offering, which was lured by national enthusiasm and promises of massive distributions and soft loans to buy the stock.
“I lost what I gained in 24 hours … the downfall is crazy,” Saleh Al-Ghamdi, 32, a government employee who invested his savings in Aramco’s bid, told Reuters.
He added: “There is no trick with the hand … waiting for it to return to the price of the subscription time and get out of the market without return.”
A Twitter user named Abdullah published a picture of a truck traveling at full speed on a slippery slope and wrote beneath it: “The situation is now in (Aramco’s) share.”
Most of the stock buyers were individual investors from Saudi Arabia and institutions in the Gulf, while global funds declined due to valuation.
Prior to the initial public offering, which saw individual investors from Saudi Arabia purchase about 30 percent of Aramco’s offered shares, billboards circulated on the roads and in shopping malls to become the largest initial public offering bearing the phrase “Aramco shares soon on Tadawul”.
The government has pledged to give investors one bonus share for every ten shares they buy in the event the stock is held for a period of 180 days.
Umm Fahd, who has four children, said: “The whole family invested in Aramco in the hope of a guaranteed investment and we never thought that it (the stock) would go down.” Aramco bought her shares with her husband, parents and siblings.
“The drop is shocking and sad, but we can only wait for it to rise again,” she added.
The initial public offering came nearly four years after Crown Prince Mohammed bin Salman put forward the idea in an effort to raise billions of dollars to invest in non-oil industries, provide employment and diversify the resources of the world’s largest crude exporter away from oil.
A fund manager in Riyadh said that the falling market surprised investors and did not have an opportunity to exit from Aramco’s share.
The Saudi stock market retreated following the example of global markets that retreated due to the outbreak of the Corona virus, but it suffered a sharp decline after oil prices fell 30 percent after the collapse of the OPEC + agreement and Riyadh moved to increase production and reduce crude prices.
Abu Mutlaq, 50, said he remembered when the Saudi Energy Minister said that anyone who did not take advantage of the opportunity to invest in Aramco’s IPO would regret it.
He continued: “Now I have already regretted that my money was lost on Aramco’s shares.”