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The price of oil drives up the share price: Saudi Aramco now has more value than Apple

The price of oil drives up the share price
Saudi Aramco is now more valuable than Apple

For the first time since 2020, Saudi Aramco shines more than Apple. The oil giant is benefiting from the current world situation and attracting investors, very different from the American iPhone maker. The latter is one of the many victims of the so-called “panic sales”.

The largest oil company in the world, Saudi Aramco, replaced the Apple technology group as the most valuable company in the world on Wednesday. While Saudi Aramco’s share price has benefited from high oil prices in recent weeks, the iPhone maker’s paper has come under increasing pressure due to rising capital market interest rates, supply bottlenecks. and growth problems. This Wednesday, Apple dropped 5% to its lowest level since late October last year.

Apple
Apple 146.50

Saudi Aramco’s share price on the Tadawul home exchange in Riyadh has risen more than 17% since mid-March. Apple’s price, on the other hand, has dropped more than 18 percent since the end of March. The prospect of rising interest rates has led investors to sell tech stocks in particular. Because in the long phase of cheap money, investors had increasingly relied on high-growth tech companies. Now, however, interest rates are likely to rise sharply due to high inflation, which could mean Apple, Amazon, Microsoft & Co. are clearly overvalued.

Shares of Saudi Aramco, which was listed on the stock exchange at the end of 2019, had recently hit a record high. The company currently has a market capitalization of $ 2.43 trillion. In doing so, they left Apple behind for the first time since 2020. The Cupertino California-based company is worth just $ 2.37 trillion with a loss of a whopping five percent this Wednesday. However, only a small fraction of Aramco’s shares are freely tradable and the vast majority are state-owned. At the beginning of the year, Apple, with around three trillion dollars, weighed a trillion dollars more than the oil producer of Saudi Arabia.

The US Federal Reserve is likely to raise interest rates by an additional 1.5 percentage points this year. This and the prospect of an ongoing war in Ukraine mean that big tech companies cannot be expected to return to their old strength anytime soon, said Tim Ghriskey, portfolio strategist at Ingalls & Snyder. He talked about “panic selling” in a number of tech stocks and other top-tier companies. Investors are likely to reinvest the funds freed up in the process, not least in energy stocks whose growth prospects are rosy. “Companies like Saudi Aramco benefit greatly from this mixed situation,” says the expert.

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