MSM 30 closed stable ahead of Eid holidays

The MSM30 closed the week almost stable at 4596.05. The Financial sub index was the only loser as it closed down by 0.11 per cent. Both the Industrial and Services indices went up by 0.44 per cent and 0.37 per cent respectively. The MSM Shariah Index also closed up by 0.33 per cent.
Ahli Bank SAOG invited its shareholders to attend the EGM and AGM to discuss items including approval of the issuance of Additional Tier I Capital Instruments in the form of perpetual bonds upto RO 75m with nominal value of RO 1.000 per bond plus issue expenses in single or multiple tranches, either by Public or Private Placement as determined by the Board of Directors after obtaining all required approvals from the Central Bank of Oman and the Capital Market Authority. The current total value of listed corporates perpetual bonds is RO 258.8m. Once Ahli Bank perpetual bonds completes, total value will be RO 333.8m.
Al Ahlia Insurance Company SAOG disclosed the possible impact of Mekunu Cyclone stating that based on current information the Company’s financial exposure, net of reinsurance, is around RO 1.4m. However, the company added that it has sufficient large and weather loss provisions in place and therefore no adverse impact on Profit After Tax (PAT) is expected for 2018 based upon the event of Cyclone Mekunu.
In the weekly technical analysis, the MSM index will fluctuate between the first support level at 4,560 points (broken this level will allow the index to reach 4,520 points) and the first resistance level at 4,600 points (cross this level will enable the index to reach 4,640 points. In the technical analysis, the market is still moving between these two levels.
The Financial Affairs and Energy Resources Council approved a number of measures and procedures that aim at ensuring financial stability and improving the credit rating of the Sultanate. It also urges the need to speed the process of the privatisation programme and to convey activities carried out by the government to the private sector. This initiative is significant and will result in notable benefits to the economy and companies operating within the targeted sectors. Moreover, improving the credit rating of the Sultanate will attract more foreign investments.
In a step towards, government care for the welfare of Omanis and directing supports in transparent way, the Council of Ministers last week announced raising of maximum salary for fuel subsidy beneficiaries from RO 600 to RO 950. The decision will come into force from August 1. We believe that such a decision is not expected to have a notable burden on the general budget as the previous category (RO 600) was not supporting large numbers, and the rise in oil prices has strongly supported government revenues. It is worth stating that RO 100m was allocated in the budget to citizens affected by fuel subsidies cut after oil revenue dropped. The mechanism was Omanis who fit the support conditions would receive up to 200 litres of M91 petrol per month at a maximum cost of 180 bs per litre.
Locally, data published by the National Centre for Statistics and Information with respect to major importers of non-oil Omani exports showed that both the UAE and Saudi Arabia formed 37.7 per cent of total non-oil exports in 2017 at RO 1.2bn. China and India are also major importers of Omani non-oil exports as both of them formed 17.5 per cent of the total number. The value of total non-oil exports in 2017 stood at RO 3.17bn, up by 32.4 per cent YoY on growth of exports to all countries within the export list. In January 2018, non-oil Omani exports stood at RO 272m, up by 33.7 per cent on yearly basis.
CBO’s foreign assets reached RO 6.96bn at the end of March 2018, down by 10 per cent YoY and 2 per cent MoM, but above the TTM simple average of RO 6.8bn. These assets include bullion, IMF reserve assets, placements abroad and securities.
Bahrain Bourse topped the gainers up by 3.45 per cent within the GCC region followed Abu Dhabi Securities Exchange (+1.12 per cent).
Bahrain government international bond are witnessing heavy battering and the drop sped after recent IMF announcement. IMF said that Bahrain must urgently reform its finances to cut a large state budget deficit and support its currency. Fiscal steps which the government has already announced would cut the deficit to 11 per cent of gross domestic product in 2018 from 14 per cent last year, but without further measures, non-oil revenue will stagnate and economic growth will slow, noting that public debt increased to 89 per cent of GDP last year and foreign reserves were low, covering only 1.5 months of non-oil imports. The cost of insuring Bahrain’s sovereign debt against default jumped near multi-year highs this month because of investors’ concern over the country’s debt burden as US interest rates rise.
World Investment Report was issued last week which detailed about the Foreign Direct Investment (FDI) movement globally. In 2017, within GCC, outflows were recorded at $30.0bn while inflows stood at $15.5bn. Net FDI flows stood at negative $14.5bn in 2017 compared to negative $13.6bn in 2016. In terms of inflows, UAE was the top destination with inflows of $10.35bn; however, the country witnessed high outflows as well and ended the year with net FDI flows of negative $3.6bn. Oman witnessed the highest net FDI flows within the GCC at $1.47bn in 2017. Inflows to Saudi Arabia — traditionally the largest FDI recipient in the region — slid by four-fifths to $1.4bn, due to divestments and negative intracompany loans by foreign multinational enterprises (MNEs). Kuwait recorded the highest negative net FDI flows of $7.8bn in 2017, with inflows of $301m while outflows of $8.1bn.
Globally, China’s trade surplus narrowed sharply to $24.92bn in May 2018 from $40.51bn in the same month a year earlier. Imports rose 26 per cent from a year earlier to an all-time high of $187.95bn in May, after a 21.5 per cent rise in a month earlier. Imports of commodities continued to lead the way in May, with shipments of copper, iron ore and soybeans all rising from the previous month. China’s crude oil imports fell from record highs, which hit the month before to 39.05 million tonnes in May, or 9.2 mbpd. It compared with 9.6 mbpd in April and 8.76 mbpd a year earlier. Exports increased at a slower 12.6 per cent to $212.87bn, following a revised 12.7 per cent rise in the preceding month. For January-May, China’s trade surplus narrowed to $102.81bn from $141.90bn in the same period 2017.
As expected, the US Federal Reserve raised interest rates for the second time this year and lifted its benchmark overnight lending rate by a quarter of a percentage point to a range of 1.75 per cent to 2 per cent. However, the central bank upgraded its forecast to four total increases in 2018 (instead of three earlier) as unemployment falls, better jobs were created and expectations of a slight overshoot of the targeted inflation of 2 per cent at 2.1 per cent in this year and running through 2019 and 2020. Some GCC Central banks followed the action as the UAE central bank raised its repo rate by 25 basis points to 2.25 per cent, and increasing interest rates on certificates of deposit by a similar margin. Also, Bahrain’s interest rate on the one-week deposit facility rose to 2.25 per cent, while the overnight deposit rate climbed to 2 per cent, the one-month deposit rate to 3 per cent, and the lending rate to 4 per cent. Further, the Saudi Arabian Monetary Authority (SAMA) decided to raise its two key interest rates by 25 basis points or 0.25 per cent. SAMA increased its repo rate, at which it lends to banks, by a quarter point to 2.5 per cent. [Courtesy: U Capital]