Let's spend a little more time with President Trump's weekend push to have Saudi Arabia's state-owned oil giant select New York as the venue for its massive IPO, which could happen as soon as next year.
ICYMI: Trump tweeted Saturday that he would "very much appreciate" the listing on the New York Stock Exchange, calling it "important to the United States." It's among the many topics that surfaced in his call Saturday with Saudi Arabia's King Salman, and Trump told reporters on Air Force One that "they will consider it."
Why it matters: Selecting a U.S. exchange for the listing of the company that Saudi officials hope is valued at $2 trillion (though many analysts believe the value is much lower) would bring massive listing fees for the winning exchange. The Saudi's plan to sell 5% of the company to investors.
And successfully courting such a massive piece of global business would be seen as a win for the Trump administration. But the Saudis are wary of New York for a few reasons, including litigation risks.
Be smart: I chatted Sunday with Joe McMonigle, an analyst with Hedgeye Research, about what might be motivating Trump's decision to go public with the push for a U.S. listing. A couple takeaways...
- The high tensions in the region mean Trump senses that it's a good moment to try and wield U.S. influence. The U.S. is a key Saudi ally and major military supplier, and indeed the White House summary of Trump's weekend call with King Salman notes that they discussed the missile intercepted from Yemen and "the continuing threat of Iranian-backed Houthi militias."
- "I think he [Trump] thinks from a geopolitical standpoint, he has a lot of leverage and he is going to try and utilize it," said McMonigle, who was the Energy Department's chief of staff during the George W. Bush administration.
- Trump's pressure comes as Crown Prince Mohammad bin Salman (also known as MBS) is seeking to highlight his reformist credentials, and U.S. listings require more corporate disclosure. "He's testing [MBS'] reformist policies in promoting transparency and anti-corruption by ratcheting up the pressure for the U.S. listing," McMonigle said.
- McMonigle called Trump's move "wily" but believes the IPO is still unlikely to occur in the U.S. "He probably breathed some new life into the potential U.S. listing," McMonigle said. "He probably thought he had nothing to lose."
The official word: "A range of options, for the public listing of Saudi Aramco, continue to be held under active review. No decision has been made and the IPO process remains on track," the company said in statement.