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Traders push Saudi Aramco's value closer to crown prince's controversial target

Tom Belger
·Finance and policy reporter
Saudi Aramco
Saudi Aramco shares rose after its stock market debut. Photo: Fayez Nureldine/AFP via Getty Images

Saudi Aramco shares have surged again on their second day of trading, briefly hitting the $2 trillion (£1.5tn) valuation long wanted by crown prince Mohammed bin Salman.

The oil giant made its stock market debut on the local Tadawul exchange in Riyadh, Saudi Arabia, on Wednesday in the world’s biggest share sale.

The state company sold 0.5% of its shares to individual investors and another 1% to institutional investors, with most Saudi nationals or based in the Gulf.

Shares were up almost 9.4% at around 8.40am in London, but had surged to the 10% maximum daily limit on the open to hit the valuation target.

Saudi Aramco shares were trading at 38.5 riyals (£7.7, $10.2) each, in a second day of gains over the IPO price of 32 riyals.

READ MORE: Saudi Aramco makes stock market debut in world’s biggest IPO

But Bernstein analysts estimated the company’s value at around $1.36tn, giving it an “underperform” rating and raising the risk of slow income growth if oil prices remain flat.

"Saudi Aramco is the largest, most profitable oil company in the world – but size is not everything,” they wrote in a note, according to Reuters.

A preliminary valuation on the oil company had put its worth between $1.6tn and $1.7tn.

Aramco produces more than 10% of crude oil supply globally.

READ MORE: Saudi Aramco over-valued by $300bn, say analysts

After initially wanting to launch an IPO in 2019, Aramco chief executive Amin Nasser had said in January this year that Aramco would be ready to float by 2021.

It then made a rare financial disclosure in August to bolster renewed interest in a potential IPO from foreign investors. Its results showed a 12% slide in profit in its first half results statement, but it still makes more money than any other company in the world.

The oil price has fallen to about $58 per barrel (CL=F; BZ=F), down from $69 to $66 per barrel in the same period in 2018. The energy titan says this is a key reason for why net income has dropped 4%, to $46.9bn.