MSM30 posts weekly gains amid support from financial sector

Despite a drop in trades, the performance of the market improved over the past week with the support of institutional presence sought to build investment positions in key stocks within the financial and service sectors. Overall, macroeconomic news has been encouraging, including the decline in the general deficit and progress in government initiatives to diversify the income sources. Moreover, the attractive returns offered by a number of stocks also helped attract the attention of individual investors.
MSM30 ended the week up by 0.66 per cent at 4,419.27. The Financial Index also moved up by 1.17 per cent while both the Industrial Index and the Services Index closed down on weekly basis by 1.06 per cent and 0.13 per cent respectively. The MSM Shariah Index closed up by 1.55 per cent on weekly basis.
ACWA Power submitted a binding commitment in response to the request for offer issued by OPWP in respect of obtaining an extension of APB reserve osmosis plant beyond 2021 (being the end date of original extension).
However, the company has been notified by OPWP that it was not successful in the request for offer process. Accordingly, the company plans to engage further with relevant parties and will prepare options for its Board of Directors regarding the mitigation of the business risks associated with the OPWP decision.
The company added that this decision does not have an impact on its power generation operations.
Both Oman Flour Mills Co and Salalah Mills Co announced that they have received Wheat and Flour subsidy from Ministry of Finance. Oman Flour Mills Co said that it got RO 2.6m while Salalah Mills Co has received 50 per cent of the subsidy due from the government for the period 2013–2015 which equal to RO 2m. The two companies stated that they have already accounted the subsidies in their income statements of previous years and thus no impact on the profit of the current period.
Construction Materials Support Sub Sector which includes seven listed companies posted an increase of 19.3 per cent in total net earnings for H1’18 at RO 4.1 million mainly backed by National Aluminium Products, Al Jazeera Steel Products Co and Construction Materials Ind. Both National Aluminium Products and Construction Materials Ind posted gains in 1H’18 compared with losses for H1’17 while Oman Ceramic Company and Abrasives Manufacturing Co posted losses for H1’18.
Locally, Oman Public Finance posted a deficit of RO 1.4 billion, down by 42.3 per cent on better oil and gas revenue as per latest monthly bulletin published by National Centre for Statistics and Information. Total revenues went up by 23.5 per cent to RO 4.94 billion supported by higher earnings from most segments especially net oil revenue which formed 59.2 per cent of total revenues and went up by 34.7 per cent YoY (i.e. RO 755.3 million) on better oil price (stood and an average of ($64/BBL) compared with $52/BBL for the same period last year.
Total expenditures went up by 5.7 per cent on yearly basis to RO 5.96 billion while actual expenditures under settlement dropped by 51.2 per cent. To finance the deficit, the government used means of financing covering net loans (82.2 per cent of total financing), net local loans (17.8 per cent of total financing) and there was no withdrawal from reserves.
Till H1’18, Interests paid on Loans were RO 225.8 million, up by 98.8 per cent YoY (i.e. RO 112.2 million). For July’18, the average Oman Oil price was $74.4/BBL, higher by 49 per cent compared with the budgeted number of $50/BBL for 2018.
Taking into account the daily average price and export percentage, we expect additional net oil revenue of RO 1 billion during 7M’18 compared to the budgeted price of $50/bbl.
As per CBO’s latest statistical bulletin, the total credit of the Omani Banking sector (conventional loans and Islamic financing) stood at RO 24.3 billion as at the end of Jun’18, up by 6.1 per centYoY and +0.8 per cent MoM. Total deposits stood at RO ‎‎22.34 billion, up by 4.5 per cent YoY and 0.1 per cent MoM.
Credit growth (on YoY basis) slowdown reversed at the end of 2017 but has once again begun to show signs of slowing down. Deposit growth, on the hand, has picked up markedly from a low of 2.3 per cent in April ’18, to 4.5 per cent YoY in June’18. Total Loan-to-Deposit Ratio stood at 108.6 per cent.
Conventional banks account for 86.3 per cent of total system credit at RO 20.94 billion as at the end of June ’18, rising by 4.1 per cent YoY and 0.7 per cent MoM. Conventional deposits at RO 19.2 billion (+2.5 per cent YoY, +0.2 per cent MoM) form 85.9 per cent of the total banking deposits of Oman.
Conventional Loan-to-Deposit ratio stood at 109.1 per cent. Islamic credit stood at RO 3.32 billion (+20.8 per cent YoY, +1.3 per cent MoM) and Islamic deposits stood at RO 3.15 billion (+18.2 per centYoY, -0.3 per cent MoM), with loan-to-deposit ratio at 105.4 per cent.
Qatar Exchange posted the highest weekly gains closing up by 4.64 per cent while Kuwait Stock Exchange dropped the most as it closed down by 1.46 per cent. (Courtesy: U Capital)