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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 — When most things are expensive, the USD and yen are cheap

We are now well into the new year, and it is time to consider our choices for the best FX market ideas for 2018. The year has started positively, just as last year ended, and it is hard to see why that would come to a sudden end any time soon. However, as we conclude in our Global Macro Forecast, we believe we are now at the very peak of the business cycle, and while a more pronounced downturn will not arrive until next year, signs of a slowdown are likely to emerge before that. Abundant access to cheap capital from the equity and credit markets has coincided with generous fiscal policy and low wage gains (despite negative unemployment gaps in many important economies) around the world. It is time to start preparing the ship for a rocky ride, and we are taking aboard the dollar and the yen for a smoother sailing.

Lars Henriksson, Strategist |

Swedish Rate Wrap — Winning strategy: short duration

In this week's Rate Wrap, we summarise our outlook on interest rates from our Global Macro Forecast. While we predict a slowdown in the US in 2019, we expect strong global growth to continue for most of 2018, which will influence the fixed income markets in the near term. We believe that short duration will be the winning strategy in this environment.

Kiran Sakaria, Junior Strategist |

Central bank calendar — 2018

• Federal Reserve
• European Central Bank
• Bank of England
• Riksbank
• Norges Bank
• Bank of Japan
• Swiss National Bank
• Reserve Bank of Australia
• Reserve Bank of New Zealand
• Bank of Canada

Kiran Sakaria, Junior Strategist |

FX Pilot — Will the US tax reform boost the dollar?

President Trump and the Republicans managed to squeeze in a radical tax reform in the nick of time in order to have it up and running in 2018. Whereas the changes in income tax are temporary, the changes in corporate tax are permanent, and it all starts at the beginning of this year. It is important to note that it is not only lower corporate tax that will incentivise US companies to bring their profits back to the US. For example, investing the money in the US will be more lucrative, as the new rules allow for quicker expensing of machinery investments. Also, dividends from foreign entities will be exempt from US taxes. We take a look at how this will influence the value of the dollar.

Lars Henriksson, Strategist |