First shares in Aramco will be sold on Saudi stock exchange

Saudi state oil company Aramco's CEO Amin Nasser attends the 24th World Energy Congress (WEC) in the UAE capital Abu Dhabi on Sept. 10, 2019. (Karim Sahib/AFP)
Updated 10 September 2019

First shares in Aramco will be sold on Saudi stock exchange

  • State oil company’s IPO coming ‘very soon,’ chief executive says at energy congress
  • The planned IPO forms the cornerstone of a reform program Vision 2030

ABU DHABI: Saudi Aramco’s long awaited initial public offering (IPO) will take place “very soon” on the Tadawul, the Kingdom’s stock market, the state oil company’s chief executive Amin Nasser said on Tuesday.

There was also likely to be a later listing on a foreign market, Nasser said, but he declined to say where.

“The primary listing is to list locally but we are also ready for listing outside in other districts,” Nasser said at the World Energy Congress in Abu Dhabi. “We are ready to list wherever shareholders decide.”

Nasser echoed remarks by Prince Abdul Aziz bin Salman, the Kingdom’s new energy minister, on the first day of the congress. “As you heard from Prince Abdul Aziz yesterday, it is going to be very soon. So, we are ready — that is the bottom line,” Nasser said.

His comments were the first confirmation by an Aramco official of a two-stage IPO, with the first tranche of shares — perhaps about 1 per cent of the company —offered to investors on the Tadawul.

New York, London and Hong Kong have all said they would like to stage the foreign tranche of the IPO, but Tokyo has also emerged as a strong candidate. There has been speculation the IPO would be announced at the Future Investment Initiative summit in Riyadh next month, but some bankers believe it could be unveiled even sooner.

“Listing even a small number of shares of Aramco on Tadawul will provide Saudi citizens with an opportunity to invest in the Kingdom’s crown jewel,” Ellen Wald, energy consultant and author of the book Saudi Inc, told Arab News. “However, there are risks associated with this, as Tadawul is a relatively small exchange and Aramco is a large company.”

The Aramco IPO is expected to be among the largest in corporate history, and a raft of global banks last week paraded their credentials to be chosen for the prestigious and lucrative jobs advising the company and the Saudi government on the share sale. Once the winners are named, there is little to stop the IPO process from beginning immediately.

Addressing the congress on Tuesday, Nasser also said there was no limit to the oil industry’s potential if it could meet society’s demand for “ultra clean” energy. “The world faces an incredible climate challenge and we need a bold response to match,” he said.


US workers face an unequal future when virus recedes

Updated 01 June 2020

US workers face an unequal future when virus recedes

  • Unemployment is now at a level not seen in since the Great Depression nearly a century ago

WASHINGTON: As the coronavirus worked its way across the US, it cleaved the country’s workforce in two: Those who have the ability to work from home, and those who do not.

From baristas to hotel workers to tourism operators, people whose job requires them to show up in-person were among the hardest hit in the waves of layoffs, and also those on the low end of the US pay scale.

Unemployment is now at a level not seen in since the Great Depression nearly a century ago, and moving higher, while the coronavirus is expected to threaten the country for months to come, factors analysts fear will only serve to deepen inequality for workers in the world’s largest economy.

“People who are well-off and highly skilled and work from home are going to demand that their employers make accommodations for them,” said Jesse Rothstein, a former chief economist at the Labor Department who now teaches at the University of California, Berkeley. But “lower skilled workers ... are taking on more risk without more pay.”

Federal Reserve Chair Jerome Powell has described the pandemic as “a great increaser of inequality,” but experts say that is not inevitable, particularly if Congress passes new stimulus measures to support battered businesses and consumers.

“Every single cleavage we had before is widening,” said Claudia Sahm, a former principal economist with the Federal Reserve who is now with the Washington Center for Economic Growth.

“We have an opportunity to do something better than what we were doing before, but it will not just happen. It has to be a policy effort.”

When the coronavirus arrived, the US economy had a tight labor market, with an unemployment rate near a historic low of 3.5 percent in February, while long-stagnant wages were just starting to rise. Yet the job market was not as healthy as it appeared.

The US Private Sector Job Quality Index (JQI) — which uses government employment statistics to gauge the balance between non-supervisory jobs with decent pay and those without — has been charting downwards for years.

In February, the JQI was back near its all-time low reached in March 2012 as many of the jobs being created paid below the mean weekly wage, according to the index compiled by a consortium of academics and researchers.

And a study late last year from the Brookings Institution found 44 percent of US workers qualify as “low wage,” with median annual earnings of just $18,000 a year.

When the pandemic hit and sent the unemployment rate to 14.7 in April and the economy into an almost-certain recession, low-paid workers in industries like leisure, hospitality and food services were laid off in such large numbers their absence skewed average wages upwards.

While government data show most consider their layoffs to be temporary, Michael Weber, an associate professor at the University of Chicago Booth School of Business, warned that if businesses close or scale back staffing, job seekers will be forced to compete against each other, driving wages lower, as is typical in recession job markets.

Grocery store chain Kroger, e-commerce giant Amazon and several fast food companies have announced massive hirings since the pandemic hit, but offer no safe haven.

“Those are the very jobs that are under criticism over the last few years given that they pay unreasonably low wages,” Weber said. And those type of jobs “come hand-in-hand with a more precarious income situation.”

Robert Hockett, a law professor at Cornell University who is a principal researcher on the JQI, said job seekers could demand risk premiums at workplaces where they face exposure to the coronavirus, or take equity stakes in struggling companies to help keep them afloat.

The Fed reported this week that Boston area employers were giving workers temporary pay increases of up to 30 percent, in part to compensate for the increased risk and hold onto their employees.

But unemployed workers could end up forced to accept whatever jobs they can find, particularly if Congress fails to extend the small business loans and unemployment benefits temporarily expanded in the $2.2 trillion CARES Act approved in March.

“We’re kind of on a tightrope or a knife’s edge at this moment,” Hockett said in an interview.

President Donald Trump’s administration has been lukewarm toward further spending on aid for workers, predicting the coronavirus will be defeated and a strong economic rebound starting in July, even as many economists remain skeptical of a rapid, V-shaped recovery.

“It’s all going to ride on how desperate workers are,” Hockett said, “And that’s going to ride on public policy positions.”