Saudi alternate to restrict Aramco index weighting with cap

FILE PHOTO: Saudi Aramco emblem is pictured on the oil facility in Abqaiq, Saudi Arabia October 12, 2019. REUTERS/Maxim Shemetov/File Picture

DUBAI (Reuters) – Saudi Arabia’s Tadawul has launched an fairness index .TASI cap of 15% which is about to handle issues over the weighting oil large Saudi Aramco can have when it lists on the alternate.

State-owned oil agency Aramco is predicted to record 1.5% of its shares this month in a deal which might elevate greater than $25 billion and high the file preliminary public providing (IPO) of Chinese language retailer Alibaba on the New York Inventory Alternate in 2014.

The Aramco IPO is seen as a check for the Saudi alternate, the place the biggest itemizing up to now has been value $6 billion.

“Any constituent whose index weight reaches or exceeds the brink might be capped in accordance with the set restrict,” Tadawul stated in an announcement on Monday.

The transfer is a part of a broader replace of Tadawul’s index methodology, together with a revision of the free float shares calculation methodology for shares owned by authorities entities.

The brand new measures will “guarantee extra balanced indices, which can precisely characterize the motion of the market, improve disclosures and transparency and decrease securities’ dominance,” Tadawul’s CEO Khalid Al Hussan stated in an announcement.

Tadawul additionally stated it has utilized a brand new “Quick Entry” rule permitting shares of IPOs to be included within the all-share fairness index on the shut of the fifth buying and selling day.

The updates might be efficient by the top of the yr.

Reporting by Davide Barbuscia; Modifying by Shri Navaratnam and Alexander Smith

Our Requirements:The Thomson Reuters Belief Ideas.

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