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Saudi Aramco IPO Can the crown prince deliver?

The potential IPO of Aramco offers investors the chance of gaining exposure to an oil giant sitting on vast reserves. However, exposure to Aramco means exposure to the Saudi state, with which the company is tightly entwined. The IPO is the cornerstone of Saudi Crown Prince Mohammed bin Salman’s plan to ‘rewire’ the country, so a bet on Aramco is a bet on his ability to deliver McKinsey-inspired economic reforms in a country that faces many challenges. Conditions for a listing look near perfect, with stock markets close to record highs, the oil price at a cyclical high and the electric vehicle revolution perhaps hinting that peak demand could be close. The IPO has been delayed, but we argue that reflects a desire to find the right investors rather than the right price.

  • McKinsey report laid the foundations
  • Aramco is too big to value
  • Too many "ifs" and "buts"

Martin Jansson



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FX Pilot — Weak commodities to weigh on EM and support the dollar

The start of the year has challenged our EURUSD forecast, but we stick with our expectations of a stronger dollar. Earlier we argued that the US tax reforms would support the dollar and we still believe this will be the case. In this edition, we look at commodity markets and emerging economies. How will they affect the dollar?

Lars Henriksson, Strategist |

Swedish Rate Wrap — Rising inflation sets stage for continued pressure on interest rates

Following recent dramatic increases in rates, predominantly in the US, it is fitting to examine how much higher rates can go. Rising inflation and a continued strong economy moving forward indicate a continued upside.

On the domestic front, we conclude that the Riksbank remains on track to hike the repo rate in September, despite a significantly lower inflation forecast. We will also review next week's vital CPI figures, which will set the tone for the entire year.

Claes Måhlén, Chief Strategist |

FX Pilot — A lesson on the importance of normalisation

Has the equity market ever slid so aggressively on an inflation scare before? We still believe what is really troubling the market is that low or zero productivity gains can only be offset by other factors, such as low interest rates or tax cuts, temporarily. In the long run, improved productivity needs to return to support sustainable gains. If that does not occur, equity prices will start to fall once interest rates climb higher again, especially if the first sign of higher inflation is higher wages. It has not been the easiest start for the new head of the Fed, Jerome Powell, but he is probably grateful to his predecessor for how advanced the central bank's process of normalising monetary policy is. Is there a lesson to be learned for the Riksbank?

Lars Henriksson, Strategist |

Swedish Rate Wrap — A roadmap for the Riksbank

In this week's Swedish Rate Wrap, we look at the state of play ahead of the Riksbank's next monetary policy meeting on February 13 (decision to be announced February 14) and we sketch out three scenarios for the timing of the first repo rate hike. Our main scenario is a September increase, which is in line with the Riksbank's rate path.

We also reiterate our recommendations for short durations and forecast continued upward pressure on interest rates on both sides of the Atlantic.


Kiran Sakaria, Junior Strategist |