Tag Archives: Capital Markets

Trump Urges Saudi Aramco to List on New York Stock Exchange

President Donald Trump personally lobbied Saudi King Salman to list the Saudi Arabian Oil Co. on the New York Stock Exchange during a phone call between the world leaders on Saturday, according to a readout provided by the White House.

The call, which came as the president flew from Honolulu to Tokyo, followed the president tweeting his hope that the listing would occur on a U.S. exchange, raising the political stakes for what would be the largest initial public offering.

 

“Important to the United States!” Trump said in the Twitter post from Honolulu early Saturday.

Trump’s tweet, sent hours before he was set to depart for an 11-day tour of Asia, came out of the blue for Aramco, according to a person familiar with the company, who asked not to be named. But the move is consistent with a growing push by American regulators to lure companies to U.S. stock exchanges.

Trump told reporters aboard Air Force One after the call that he was motivated to send the tweet because the Aramco IPO “will be just about the biggest ever” and the U.S. wants “to have all the big listings.” The Saudis were not currently looking at listing on a U.S. exchange “because of litigation risk, and other risk, which is sad,” he said.

‘Energy Geopolitics’

“I want them to very strongly consider the New York Stock Exchange or NASDAQ or frankly anybody else located in this country,” Trump said.

The tweet was “energy geopolitics in action,” said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University and a former senior oil official in the Obama administration.

“At a time when the Saudis are looking for the U.S. to get tougher on Iran, the Saudi-Russian relationship is warming, the Saudis are trying to attract international private capital, and the Chinese are rumored to be considering taking a piece of Aramco, Trump’s personal plea to list in N.Y. raises the diplomatic stakes of Aramco’s decision.”

A spokesperson of Saudi Aramco declined to comment, as did Kristen Kaus, a spokeswoman for the Intercontinental Exchange Inc.-owned NYSE.

$100 Billion

The Aramco IPO could be the world’s largest, with the Saudi government hoping to raise $100 billion selling just 5 percent of the company. It is the centerpiece of Crown Prince Mohammed bin Salman’s “Vision 2030” reform plan, intended to diversify the kingdom’s economy and invest more heavily in infrastructure.

Although analysts and industry executives have said that figure is probably too high, even if Aramco raises half of it, it will be still double the current largest IPO, the $25 billion raised by Chinese group Alibaba Group Holding Ltd. in 2014.

While other politicians including British Prime Minister Theresa May and Japanese Prime Minister Shinzo Abe have lobbied Riyadh to attract Aramco to their domestic exchanges, Trump’s tweet is so far the most public call to Riyadh.

Prince Mohammed is currently deciding where to stage the offering. Choosing New York in addition to Tadawul, the Saudi exchange, could boost the longstanding strategic alliance between the two countries. Lawyers and bankers working on the IPO had concerns about a New York listing, however, in part due to to strict regulations about oil-reserves disclosure, accounting rules and the potential for litigation.

On top of that, Saudi Arabia has vehemently complained about a U.S. law passed in September 2016 that allows families of the Sept. 11, 2001, terror-attack victims to sue the kingdom.

Overcoming Barriers

In late October, Saudi Finance Minister Mohammed Al-Jadaan became the first senior official to openly discuss the possibility of forgoing the international part of the IPO. And Khalid Al Hussan, chief executive officer of Tadawul, said the Saudi exchange had the “aspiration” to handle the listing alone.

Ali Shihabi, executive director of the Arabia Foundation think tank in Washington, said in a Twitter post Saturday that barriers to a U.S. listing could be overcome. “If the US govt/congress can grant Aramco sovereign immunity on the NYSE then may be possible,” he wrote.

Trump’s focus on capital markets was a change from his usual targeting of political foes. But back in December, when Trump interviewed U.S. Securities and Exchange Commission Chairman Jay Clayton for the job, the then-president elect was fixated on the steep decline in U.S. IPOs, people familiar with their discussion have said.

As an attorney working in private practice, Clayton’s career highlights as a deals lawyer include working on Alibaba’s IPO. Since taking over as SEC chair in May, Clayton has said bolstering U.S. capital markets is among his top priorities. In September, he said he was “troubled” many companies were choosing not to go public. The SEC is Wall Street’s main regulator and oversees the NYSE and other exchange operators.

    Read more: http://www.bloomberg.com/news/articles/2017-11-04/trump-calls-for-saudi-aramco-to-list-on-new-york-stock-exchange

    U.S. Stocks Surge, Dollar Rises on Trump Tax Plan: Markets Wrap

    U.S. stocks rallied, the dollar extended gains and Treasuries slumped on speculation President Donald Trump’s tax-cut plan will become law this year. Gold sank.

    The S&P 500 Index inched close to a record high as banks and tech shares surged on the prospect lower taxes will fuel economic growth. Small caps, a group with among the highest tax rates, jumped the most since March. The Bloomberg dollar index hit a six-week peak, and 10-year note yields climbed to the highest in two months. Gold fell below its 50-day average for the first time since July.

    The urgent effort by Trump and Congressional Republicans to pass tax cuts they say will spur growth and investment drove investor demand for assets that will benefit from gains in the world’s largest economy. Coupled with Federal Reserve Chair Janet Yellen’s hawkish tone in remarks on Tuesday that boosted the chances for a December interest-rate hike, rumblings over the tax plan revived trades that gained favor following Trump’s stunning win almost a year ago.

    “Tax reform will be crucial in both making America competitive again and possibly extending this aging economic recovery, but it won’t happen in a vacuum and interest rates are not going to sit idly by if growth and inflation truly respond to any fiscal boost,” Peter Boockvar, chief market analyst at The Lindsey Group, wrote in a note to clients Wednesday.

    The plan announcement is just the start of what’s expected to be a brutal fight in Congress, but equity investors were encouraged by several proposals, such as allowing companies to write off capital expenditures for five years. The dollar received a push from the prospect of capital inflows as companies take advantage of a proposed one-time repatriation tax. 

    “There’s the likelihood now that it may not be a tax reform, but we’ll likely get a tax cut, and the market likes a tax cut probably better than tax reform,” John Stoltzfus, chief market strategist at Oppenheimer & Co. in New York, said by phone. “Everybody likes a quick fix, and the market has shown for years it accepts kicking the can down the road.”

    Terminal subscribers can read more in our Markets Live blog.

    What to watch out for this week:

    • U.S. data on GDP and personal spending Thursday will provide further clues as to the potential Fed policy path.
    • The euro-area inflation rate may have accelerated a touch to 1.6 percent in September from 1.5 percent but the core will probably remain at 1.2 percent. The data is out on Friday.

    And here are the main moves in markets:

    Stocks

    • The S&P 500 rose 0.4 percent to 2,507.04. The Dow Jones Industrial Average added 56 points for a 0.3 percent increase.
    • The Russell 2000 soared 1.9 percent, the most in six months, to reach another record, while the Nasdaq 100 Index gained 1 percent.
    • The Stoxx Europe 600 Index advanced 0.4 percent to the highest since July.
    • The MSCI Emerging Market Index fell 0.3 percent, hitting the lowest in five weeks.

    Currencies

    • The Bloomberg Dollar Spot Index rose 0.6 percent to the highest since August. 
    • The euro dipped 0.4 percent to $1.1749, the lowest in six weeks. 
    • The British pound decreased 0.5 percent to $1.3393. 
    • The Swiss franc fell 0.4 percent to $0.9722, the weakest in six weeks.

    Bonds

    • The yield on 10-year Treasuries jumped seven basis points to 2.3032 percent, the highest in two months. 
    • Germany’s 10-year yield added six basis points to 0.468 percent, the highest in seven weeks. 
    • Britain’s 10-year yield climbed five basis points to 1.38 percent.

    Commodities

    • West Texas Intermediate crude rose 0.4 percent to $52.07, slipping after hitting a five-month high earlier in the session. 
    • Gold declined 0.8 percent to $1,283.59 an ounce, the weakest in five weeks.

    Asia

    • Japan’s Topix index slid 0.5 percent at the close in Tokyo. 
    • Australia’s S&P/ASX 200 Index declined 0.1 percent and South Korea’s Kospi index ended less than 0.1 percent lower.
    • Hong Kong’s Hang Seng Index climbed 0.5 percent.
    • The MSCI Asia Pacific Index fell 0.4 percent.
    • The Japanese yen sank 0.7 percent to 113.06 per dollar, the weakest in almost 11 weeks.

      Read more: http://www.bloomberg.com/news/articles/2017-09-26/yen-weakness-to-support-japan-stocks-after-yellen-markets-wrap