Mesaieed Petrochemical Surges 400% on First Trading Day in Qatar

A staggering trading day for Qatar’s Mesaieed Petrochemicals points toward serious expectations for the company.  The trading price rose 400% in a single day, immediately after it had completed Qatar’s largest IPO in five years.

Mesaieed Petrochemical Holding rose more than five fold on its first day of trading after completing the country’s biggest initial public offering in five years.

The shares closed at 55 riyals after opening at 10 riyals on the Qatar Exchange. The stock rose as high as 73.9 riyals during the day.

State-run energy company Qatar Petroleum raised 3.2 billion riyals ($880 million) by selling a 26 percent stake in Mesaieed to Qatari nationals last month. The share sale is the nation’s biggest since Vodafone Qatar raised $1 billion in 2009, and the largest first-day gain for an IPO in the Middle East and Africa since 2009 when Saudi Arabia’s Ace Arabia Cooperative Insurance Co. (ACE) sold shares, according to data compiled by Bloomberg.

“The IPO was at 10 riyals which is a significant discount to what this company is worth,” Bobby Sarkar, head of research at Qatar National Bank Financial Services, said in a phone interview. “This is a solid petrochemical, QP-backed company.”

Mesaieed was formed in September and owns Qatar Chemical Co., Qatar Chemical Co. II and Qatar Vinyl. The government valued the company at 12 billion riyals for the IPO, below an initial valuation of 16.7 billion riyals, Finance Minister Ali Al Emadi said last month. Foreigners are allowed to trade in the company’s shares once they have been listed.

Mesaieed is the first company to be listed on the country’s bourse since MSCI Inc. (MSCI) agreed to upgrade Qatar to emerging-market status in June. It raises to 43 the number of companies traded on the Qatar Exchange, Chief Executive Officer Rashid al Mansoori said in an interview in Doha today.

By Robert Tuttle of Bloomberg

The full article is visible via the link below – Pankaj Oswal

http://www.bloomberg.com/news/2014-02-26/mesaieed-petrochemical-surges-400-on-first-trading-day-in-qatar.html

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Pankaj Oswal – Gulf companies look to SE Asia for petrochemicals

Recent excitement about the booming Chinese petrochemical industry has spread into other parts of the continent.  Major investments from Qatar Holdings ($5 billion), Dubai Drydocks World ($2.5 billion investments) and Qatar Petroleum ($4 billion) into Malaysia, Indonesia and Vietnam all announced in the last week are evidence of where the petrochemical money is headed in 2013.  Additionally, Saudi Aramco and Borouge are also developing business presences there.

Global factors including China’s economic slowdown and the maturation of wages in the country have meant that others in the South-East have become more attractive options of late.

SE Asia has proved to have quite a penchant for hydrocarbon work and so it will be likely that some focus of the product globally will be drawn to the region.

The change in flows from Middle-Eastern investors is an interesting phenomenon, but probably has a grounding more in politics and economics than in pure supply and quality terms, particularly China become less attractive by day as a source of cheap labour.  The industry will take note, and this move could place downward pressure on prices, particularly on hydrocarbon prices, across the globe.

By Pankaj Oswal