Despite continued weakness in trading, the past week registered many geopolitical developments and local government decisions which resulted in the mixed performance of financial markets, locally as well as regionally. We also have noticed recovery in telecom sector and investors focus on certain stocks. The MSM30 ended the week down by 0.11 per cent at 3,858.87. Both the Services Index and the Financial Index closed down by 0.99 per cent and 0.48 per cent respectively while the Industrial Index closed up by 0.41 per cent. The MSM Shariah Index closed up by 0.67 per cent w-o-w.
In the weekly technical analysis, the MSM 30 index broke our support level at 3,845 points as we mentioned in the last report. During this week the index will remain volatile along this level. Technically, if MSM30 index crosses and closes above the MA 10 days this will enable the index to reach 3,900 points. The index has a strong support level at 3,800 points. Oman’s Capital Market Authority (CMA) announced last week that it has suspended a 10 per cent tax on dividends for three years. Taxation on dividends, although not significant for government in terms of revenue, has been a deterrent for foreign investors. We believe this is a great development in boosting foreign investment into Oman, which in the past three years has witnessed a net outflow of RO 254 million.
As many as 29 local and international firms are competing for a contract to develop an electronic platform underpinning the Mandatory Health Insurance System (Dhamani) due to be rolled out before the end of this year. The successful bidder will secure a contract from the Capital Market Authority (CMA) — the regulator for insurance services in the Sultanate — to build and maintain what is billed as the ‘nerve centre’ of the Unified Health Insurance System.
Oman’s construction sector, which has been facing challenges due to the economic slowdown and delays in payments over the past few years, can breathe a sigh of relief as the banks, on the directions of the Central Bank of Oman (CBO), have decided to give some relaxations in loan repayments. CBO has allowed banks to give some extended dispensation for companies that have contracts or where banks knew that payments are due and chances are there that it (payments) may come in near future. By doing this the CBO has increased the leeway period to 180 days without classifications with constant monitoring of the situation. We see this as a very positive development for the local construction sector.
The total value of property transactions in the Sultanate till the end of March 2019 dropped by 12.2 per cent to reach RO 681 million from RO 776 million for the same period of 2018, as indicated by the preliminary statistics issued by National Centre for Statistics and Information. Of the total traded value till the end of March 2019, RO 263.4 million worth transactions were sales contracts, while RO 411.8 million transactions were mortgage deals. The number of plots issued till the end of March 2019 was 58,710, which is a decline of 5.5 per cent from the end of March 2018, when 62,127 plots were issued. As many as 15,795 sales contracts were executed in the month of March 2019 against 16,045 contracts during the same period of 2018. However, the total number of mortgage contracts fell by 3.1 per cent to reach 3,901 contracts against 4,025 contracts in 2018.
The insurance sector in Oman reported net income of RO 7.52 million in 1Q19 compared to RO 10.3 million in 1Q18, decline of 27 per cent YoY. Companies which were able to report higher YoY profitability during 1Q19 were Muscat Insurance, Arabia Falcon Insurance, Takaful Oman and Al Ahlia Insurance. The only company which reported loss during 1Q19 was Oman United Insurance which was largely because of its investments. National Life and Al Ahlia Insurance combined profitability accounted for 60 per cent of the sector in 1Q19 compared to 45 per cent in 1Q18.
All GCC indices ended down led by the Abu Dhabi Securities Exchange, which closed down, by 6.6 per cent while Muscat Securities Market declined the least during the week.
MSCI will implement the first step of the inclusion of the MSCI Saudi Arabia Indexes in the MSCI Emerging Markets Indexes at the end of May this year. Thirty Saudi Arabian securities will be added, representing an aggregate weight of 1.42 per cent in the MSCI Emerging Markets Index. The second and final step of the inclusion will coincide with the August 2019 Quarterly Index Review.
[Courtesy: U-Capital]
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