2019 was a challenging year for the local stock market. The MSM 30 price index closed down, however, MSM total return index was up as it took into account dividend reinvestment while the earlier one did not.
Despite positive announcement on the macro-economic front, the local market witnessed a fall during the year as per the price index while it was higher if we calculate the MSM total return index. Overall, the price index closed down by 7.92 per cent at 3,981.19 while MSM total return index was up by 4.1 per cent since its inception in mid-February (4,076.88) to close the year at 4,243.79.
Sector wise all the indices closed down led by the Services Index, which closed down by 17.19 per cent at 1,896.58 followed by the Industrial Index, which closed down by 15.7 per cent to close at 4,206.35. Financial Index dropped the least by 7.0 per cent at 6,349.26. The market capitalisation stood at the year end at RO 18.76 billion. The MSM Shariah Index ended down by 9.43 per cent at 536.07.
Turnover closed down 6.7 per cent to RO 711 million while the volumes dropped by 3.1 per cent at 3.89 billion.
Amongst the brokerage houses in Oman, Ubhar Capital closed the year at number one position with a market share of 33.99 per cent.
The year kicked off with the announcement of the State General Budget that was expansionary in nature, resulting in slight support to the index followed by a volatile period. Corporate results which were better than 2018 gave some respite to the market however post the result period market started its decline as investors booked the profits. Low share prices and AGM announcement gave some respite to the market and we again witnessed the market picking up to get hold of companies which were estimated to announce good dividends. However, post the dividend season, market started to decline as companies went ex-dividend which affect the Index which is ‘price’ based. During 1Q19, market declined by 7.9 per cent.
In the second quarter, market started on a positive note because of the low ex-dividend prices but it did not last long as various factors came into play. IMF slashed the growth forecast across the region, rating agencies downgraded/changed the outlook and announcement of third telecom operator which pressurised the existing large cap telecoms. This was followed by the generally low turnover season because of lesser working hours during the Ramadhan. However, in June, announcement of removal of tax on dividends give the market a healthy breathing space and the market recovered from the lows (3,828, index down by 4 per cent) to close the quarter at 3,884.9 (down by 2.5 per cent).
In the third quarter, on the back of removal of tax on dividends, foreigners entered the market and we witnessed net foreign inflow of $7.2 million in the period of three months after the announcement of this news. Furthermore, government prudent policies resulted in drop of the deficit which was also taken positively by the rating agencies which changed the outlook of Oman from Negative to Stable. On the back of such news and announcements, market recovered and the third quarter proved to be the best quarter with market closing higher by 3.4 per cent.
Riding on the positive news of the previous quarter, fourth quarter started on an upbeat note, with index going up 2 per cent further up until mid-November on the back of good corporate announcements and better result season. However, at the start of the December, we witnessed sizeable foreign outflow from the market. Since the start of December foreigners were net seller of over $16 million which changed the market sentiments and eroded all the gains registered from the start of 2nd half to mid-November to close the 4Q19 and the year down by 0.9 per cent and 7.92 per cent, respectively.
Govt Development Bonds: During the year, there were three Government Development Bond listings, i.e. issue 60 to Issue 62 amounting to RO 400 million. More details in the following table:
Corporate Bonds and Sukuk: The total issuance value of corporate bonds and Sukuk that got listed on the Muscat Securities Market in 2019 stood at RO 232 million, down by about 2.24 per cent compared to total issuance value of bonds and Sukuk in 2018. Sohar Int Bank Perpetual Bond formed the highest share at 43 per cent of the total value.
Special Deals: The total value of special deals carried out on the Muscat Securities Market in 2019 stood at RO 206 million, i.e. a yearly increase of 58.7 per cent. Most of the deals were carried out within the Services sector and the Financial sector.
Foreign Inflows: For the fifth year, foreigners continued to exit the market. The year started on a low note but during the year in the second quarter news regarding removal of tax on dividends for foreigners changed the investor sentiments and market started propping up on foreign inflows. However, things started to change at the end of the year and foreigners started exiting the market ending the year with negative net foreign outflow of approximately $13 million.
IPO: During the year only one IPO materialised which was Musandam Power Company. The IPO in 2019 was one of the most unique as for the first time book building method was used.
The 28 million shares IPO offering, was comfortably oversubscribed with an overall subscription of around 3.5 times. In Phase I of the IPO, the Offer received a strong response with an oversubscription of 5.6 times of Phase I offer shares. While, phase II was oversubscribed 1.6 times of the Phase II offer shares. (Courtesy: U-Capital)
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