This article is brought to you by a Russian Telegram channel "Antihype on money," an analytical channel about all economic hype trends and their triggers.
What happened: Saudi Aramco is about to apply for an IPO, which expected to be a record IPO in terms of volume and make the company the most expensive in the world with a significant margin from the current leaders. Latest news reports that Saudi Aramco's capitalization is valued at $1.71 trillion at the max level (40% more expensive than Apple Inc.). This triggered speculation on the double growth potential of Russian oil producers if we evaluate them based on the same price/earnings ratio.
What really happened: The Russian market is trading at a significant discount to global peers in many sectors, including oil and gas. For the most part, investors are afraid of specific political risks, in particular, possible sanctions, as well as significant government influence on business. These factors hold back the growth of Russian companies. It will be surprising if the Russian market suddenly takes Saudi Aramco's P/E indicators as a benchmark, quickly compensating for the "discount" that has been held for years.
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