Saudi Aramco eventually plans to list on international exchanges, said Molchanov. But even if that brings in more foreign money, those governance and geopolitical risks mean that it’s “not for everybody,” he added.
“It is a very unique, very special situation. Quite a polarizing stock, frankly. Some people love it, and some people will never own it,” he said.
Geopolitical risks include instability in the region, with Molchanov flagging the
Meanwhile, Bernstein initiated coverage on Aramco with an “underperform” rating and a price target of 25.5 riyals per share. That represents a more than 27% decline from its Wednesday closing price of 35.20 riyals a share.
The stock had surged 10%, hitting the daily limit, in its first day of trading.
Bernstein analysts in their note also flagged the corporate governance issue as a risk.
“Aramco should trade at a discount rather than premium to international oil majors. Corporate governance has been identified as the key risk for investors, given that the (Kingdom of Saudi Arabia) will continue to own >98% of Aramco,” they wrote