Saudi exchange to limit Aramco index weighting with cap

This post was originally published on this site

https://i-invdn-com.akamaized.net/trkd-images/LYNXMPEFB10FQ_L.jpg

By Davide Barbuscia

DUBAI (Reuters) – Saudi Arabia’s Tadawul has introduced an equity index () cap of 15% which is set to address concerns over the weighting oil giant Saudi Aramco will have when it lists on the exchange.

State-owned oil firm Aramco is expected to list 1.5% of its shares this month in a deal which could raise more than $25 billion and top the record initial public offering (IPO) of Chinese retailer Alibaba (NYSE:) on the New York Stock Exchange in 2014.

The Aramco IPO is seen as a test for the Saudi exchange, where the largest listing so far has been worth $6 billion.

“Any constituent whose index weight reaches or exceeds the threshold will be capped in accordance with the set limit,” Tadawul said in a statement on Monday.

The move is part of a broader update of Tadawul’s index methodology, including a revision of the free float shares calculation methodology for shares owned by government entities.

The new measures will “ensure more balanced indices, which will accurately represent the movement of the market, enhance disclosures and transparency and minimize securities’ dominance,” Tadawul’s CEO Khalid Al Hussan said in a statement.

Tadawul also said it has applied a new “Fast Entry” rule allowing shares of IPOs to be included in the all-share equity index at the close of the fifth trading day.

The updates will be effective by the end of the year.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Add Comment