Coronavirus fears, low oil prices pull down MSM
Published: 06:03 PM,Mar 22,2020 | EDITED : 05:04 PM,Apr 28,2024
Muscat: The MSM30 Index closed the week down by 4.45 percent w-o-w, largely on account of coronavirus pandemic related fears and low oil prices.
All sub-indices closed down, led by the Financial Index, which closed down by 4.34 percent w-o-w followed by the Services Index which closed down by 4.31 percent w-o-w and the Industrial Index which closed down by 2.23 percent w-o-w. The MSM Shariah Index closed down by 2.35 per cent w-o-w.
Gulf Investment Services and two other shareholders have signed a Sale and Purchase Agreement (SPA) with Ubhar Capital for the sale of 100 per cent of its subsidiary Gulf Baader Capital Markets.
The final value of the deal as agreed and stated in the signed SPA is RO 2.041mn plus a premium of RO 225,000. The deal value will be adjusted with the net result of GBCM for the month of March 2020. Completion of acquisition transaction will be within 45 days from the day of the signing of SPA.
Oman’s central bank announced to provide RO 8bn ($20.8 billion) in extra liquidity to banks as one of several measures aimed at supporting the economy. The central bank has asked banks to cut banking fees, adjust their capital and credit ratios, and allow repayment postponements for up to six months amongst other measures.
[Courtesy: U-Capital}
- Lowering Capital Conservation Buffers (CCB) is positive for banks in order to remain above minimum regulatory requirements, if in case, their capital takes a hit due to higher provisioning requirement.
- Increasing the lending ratio means that in case of deposit flight, regulatory maximum is not violated.
- Deferring the risk classification of loans pertaining to Government projects for the period of 6 months. This is an ideal move in the current scenario and offers a much-needed respite to troubled banking exposures.
- Banks are encouraged to consider reducing existing fees related to various banking service and to abstain from introducing new ones during 2020. It is a welcome respite for borrowers, however, it might affect banks' efforts to maintain/improve profitability through fee income.
- Reduction of interest rates is always a welcome move in order to encourage economic growth. However, for banks, it might add pressure to their net interest margins.
- Kuwait’s central bank cut its deposit rate by 100 basis points (bps) to 1.5 percent.
- Saudi Arabian Monetary Authority lowered its repo rate from 175bps to 100 bps and its reverse repo rate from 125 bps to 50 bps.
- UAE Central Bank reduced the interest rate applicable to the one-week certificates of deposit (CD) by 75 bps.
- Oman reduced its repo rate by 75 basis points to 0.5 percent.
- Central Bank of Bahrain cut its interest rates on overnight, one-week and one-month deposits by 75 bps to 0.75 percent, 1.00 percent, and 1.45 percent respectively.
CoVID-19 Stimulus Package | USD bn |
Central Bank of UAE | 27.0 |
Saudi Arabia (SAMA) | 50.0 |
Dubai | 0.40 |
Bahrain Government | 11.4 |
Qatar | 23.4 |