Despite net foreign buying of $2.6 million last week, market remained under pressure. Omani institutions remained net sellers of $2.08 million. Companies which posted below expectation results, remained under pressure. The MSM30 ended the week down by 1.59 per cent at 3747.69. All sub-indices closed down led by Industrial Index which was down by 2.58 per cent. Services & Financial Index closed down by 1.33 per cent and 1.16 per cent, respectively. MSM Shariah Index closed down by 2.07 per cent w-o-w.
As many as six new Independent Water Projects (IWP) offering in excess of 850,000 cubic metres/day of additional desalination capacity are proposed to be developed at key locations around the Sultanate over the next four years. The biggest of the six water schemes is planned at Ghubra in Muscat Governorate. The procurement process for Ghubrah III IWP, featuring a capacity of 300,000 cubic metres/day (66 MIGD), was initiated in Q1 2018, with commercial operation slated in Q3 2023. An equally large desalination plant is planned for development somewhere along the North Al Batinah coast. Procurement for the ‘North Batinah IWP’, with a capacity of around 150,000 cubic metres per day (33 MIGD) was launched in 2018. An RfP (request for proposal) for the project is proposed to be issued in the third quarter of this year with an award anticipated in Q1 2020. COD is targeted during 2023. Other projects will be in Barka, Wadi Dayqah, Masirah Island and Dhofar Governorate. From 2021 to 2025, OPWP may procure additional water desalination capacity projects. However, the government is currently working on a plan for restructuring of the water sector into a number of regional companies, which may come to fruition in this time period.
Minister of Industry, Mines and Trade of Iran, visited the plants of the Voltamp group of companies in Rusayl Industrial Area, along with the delegation which accompanied him during his visit to Oman. The minister toured various facilities of the Voltamp plants of transformers and listened to the explanations regarding development of these factories which produce high quality transformers for the Sultanate and the region. We believe this is a positive development for Voltamp and would result in higher exports in coming period.
The inflation rate in Oman rose by 0.19 per cent in June 2019, according to NCSI. NCSI data shows that, the stability of the price index in June 2019 was mainly driven by the balanced rise and growth in cost of major segments like transport that rose by 0.04 per cent, education by 1.99 per cent, culture and entertainment by 0.94 per cent, and furnishing, household equipment and maintenance group by 4.91 per cent.
Raysut Cement Company (RCC), announced joining hands with MSG Group in East Africa in a joint venture to set up a $ 40 million cement grinding unit in Berbera, Somaliland. Raysut Cement said, the setting up of the grinding plant was yet another step to advance its continuing aggressive expansion strategy into African markets. Raysut Cement will own 55 per cent in the joint venture and the remaining will be held by MSG Group in the grinding unit which will have an annual capacity of one million tonnes.
Omani Cement Companies recently announced their second quarter results. Overall earnings of the sector were recorded at RO 1.09 million in 2Q19 compared to RO 1.72 million in 1Q19 and RO 1.76 million in 2Q18. Decline in earnings were mostly contributed by the decline of Oman Cement profitability. Oman Cement profits declined by 45 per cent QoQ and 46 per cent YoY while Raysut Cement witnessed profit growth of 10.7 per cent QoQ and 6.9 per cent YoY during 2Q19. Both the companies are looking to increase their revenue base by establishing their foothold outside of Oman and mostly in the African region. 3Q19 results of the companies will also not be very strong due to the seasonal hot summer, during which the construction activities decline and the cement offtake reduces too.
Total number of mobile subscribers increased by 2.5 per cent to 6.601 million by the end of May 2019 compared to 6.44 million subscribers by the end of December 2018. Of this, post-paid mobile connections increased by 3.2 per cent to 735,316 from 712,622 subscribers in December 2018. Pre-paid mobile connections also rose by 2.4 per cent to 5.866 million from 5.728 million at the end of December 2018. Also, number of subscribers of re-sellers rose by 2.5 per cent to 776,084 from 756,799 at the end of December 2018. Total fixed telephone lines rose by 2.6 per cent to 574,627 at the end of May 2019, from 560,326 subscribers by end-December 2018. Total internet subscriptions surged by 5.1 per cent to touch 446,039 subscriptions in May 2019, up from 424,284 by the end of December 2018.
Among GCC markets, Abu Dhabi was the best performing market and it closed higher by 3.28 per cent while Oman closed down the most for the week by 1.59 per cent. Saudi Arabia’s economy grew 1.66 per cent in the first quarter of 2019, in line with expectations of a modest pick up as oil production cuts weigh on the world’s top crude exporter. The Saudi oil sector grew 1 per cent in the first quarter, while non-oil sector growth in the first quarter was 2.13 per cent, largely in line with the same period last year, but up from a 1.8 per cent growth in last year’s fourth quarter. We believe, real GDP growth of Saudi Arabia would continue to remain under pressure because of recently extended oil production cut agreement between Opec and Non-Opec countries. Government would have to rely on Non-Oil sector to aid in the growth. — Courtesy: U-Capital
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