MUSCAT, Jan 5 - The MSM30 Index closed 2020 down by 8.10 per cent year-on-year (YoY) at 3658.77, mirroring sharp declines in most stock markets across the world, said leading investment services firm Ubhar Capital (U-Capital).
While most stock markets were on fire post-Government announcements of unprecedented economic support packages, the MSM30 Index continued on its sideways pattern, staying roughly between the lowest level seen this year at 3383.54 and the highest level seen at 3780.75 after COVID-19 was categorised as a pandemic by the World Health Organisation (WHO), the publicly listed firm noted in a report.
“It was an especially challenging year for the local stock market.
The MSM30 Index closed 2020 down by 8.10 per cent year-on-year (YoY) at 3658.77, while the MSM Total Return Index was down by 1.6 per cent to close the year at 4175.48,” U-Capital stated.
Amongst the sub-indices, the Industrial Index as the only one that closed up YoY by 2.13 per cent. The Services Index closed down by 16.07 per cent and the Financial Index closed down by 11.0 per cent. The MSM Shariah Index ended down by 2.33 per cent.
The Omani government’s quick response to the pandemic in its early stages was widely appreciated, as the country moved into a swift lockdown while many countries all over the world were still struggling to come to grasp with the enormity of the situation.
The first two cases of coronavirus were reported in Oman on February 24, 2020. By that time, the MSM30 Index had already gained about 5.2 per cent on year-to-date (YTD) basis. However, the index started falling from thereon (when the first cases were reported) and reached the year’s lowest point by early-April, according to the report.
The year kicked off with the announcement of the State General Budget, resulting in slight support to the index followed by a volatile period. Corporate results, which were better in 2020 than in 2019, also provided respite to the market.
During the 1Q20, the MSM30 Index witnessed the effects of “The Great Lockdown”, when most economic activities came to a halt as the country and the world prepared itself for the effects of an unknown virus which was spreading like wildfire. The country announced full lockdown at the end of March, with suspension of passenger flights to and from Oman. Even though the market started the year on a positive note, it rapidly declined during March and closed the first quarter (1Q20) down by 13.8 per cent.
The second quarter witnessed the lowest point of the Index for the year in early-April. However, it began to see slight recovery on positive news like vaccine trials and government initiatives to control the spread of the virus.
Many companies, in a historic first move, held their delayed Annual General Meetings on online platforms during this quarter and moved on with dividend approvals that usually take place in March of each year for most companies. While the world struggled to understand the economic and social repercussions of nation lockdowns, the IMF came forth with its World Economic Outlook in April 2020, which slashed Oman’s GDP growth forecasts, as was true for many other countries given the pandemic situation. This was further followed by a generally low-turnover season because of fewer working hours during the Holy Month of Ramadhan. Hence, the quarter saw limited movement in the stock market index, with the index improving 2.4 per cent during the quarter.
In the third quarter, the MSM30 Index gained about 7.2 per cent on the back of revival of trading activity and improvement in investor sentiment which materialise don vaccine trial announcements and re-opening of economic activities.
Oman Arab Bank also completed takeover of Alizz Islamic Bank during the third quarter. The country published its Public-Private Partnership legislation in order to attract foreign investment.
The fourth quarter saw an increase of about 2 per cent in the index, mostly on lack of negative triggers. Mass inoculation procedures began in Oman in December, which proved slightly positive for the Index as a whole as sentiment improved, in general.
Foreign inflows
For the sixth year, foreigners continued to exit the market. Eight weeks out of the total in the year witnessed positive flows while the remaining ended in net foreign outflows. The year ended with net foreign outflows of approximately $105 million.
IPOs and listings
During the year only one IPO materialised which was Oman’s first REIT i.e. Aman REIT. The IPO offered 50 per cent of the RO 20 million fund of the country’s first REIT, divided into 100 million investment units at a price of 100 Baisas per unit, plus Offer expenses of 2 Baisas per unit. Aman Reit IPO was undersubscribed and ultimately the Company was listed on March 15, 2020.
During the year, Oman Arab Bank (OAB) saw its transformation into a public joint-stock company by listing its shares on the Muscat Securities Market (MSM) on July 6, 2020.
The total number of shares listed was 1.67 billion, at a listing price equivalent to RO 0.213 per share, with a total value equivalent to RO 355.6 million.
Bonds and sukuk
During the year, there were three Government Development Bond listings, i.e. Issue 63 to Issue 65 amounting to RO 550 million, higher than the three bonds issued worth RO 400 million in 2019. Oman also issued three Sukuk during the year worth RO 433.1 million.
The total issuance value of corporate bonds and Sukuk that got listed on the Muscat Securities Market in 2020 stood at RO 4.2 million, down by about 98.20 per cent compared to total issuance value of bonds and Sukuk in 2019. Hadiqah Almadina Sukuk formed the highest share at 72 per cent of the total value.
[Courtesy: U-Capital]
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