MSM 30 index rises on robust trading activity

The MSM 30 Index rose this week on improved trading activity as investor sentiment improved after FY19 corporate financial results disclosed in the previous week. GCC and Arab investors were net buyers of about $5.1 million worth of securities during the week, absorbing selling pressure from foreign and Omani investors.

The MSM30 Index closed the week up by 0.22 per cent w-o-w. The sub-indices posted mixed performance; the Industrial Index rose the most by 0.38 per cent w-o-w, distantly followed by the Financial Index at 0.08 per cent w-o-w. The Services Index closed down by 0.34 per cent w-o-w. The MSM Shariah Index closed up by 1.13 per cent w-o-w.

Sahara hospitality proposed cash distribution of 20 per cent and 10 per cent stock dividend for FY19 (ended Nov 30, 2019) subject to ‎shareholder and regulatory approval at the AGM. The proposed cash dividend is the same as the previous year, whereas no stock bonus was given in the previous year.

Al Hassan Engineering announced that Abu Dhabi judicial department has issued a judgement on January 21, 2020 ordering the liquidation of Al Hassan Engineering Company Abu Dhabi and appointing a liquidator to start the process.

Financial services board approved the reduction of Company’s Capital from RO 6.5 million to RO 2.0 million and use full legal reserves and share premium in order to write off all accumulated losses during the past years. As of 2019, Company’s accumulated losses are estimated to be at RO 7.17 million (9M19 losses at RO 6.6 million and 4Q19 loss at RO 0.57 million).

The Capital Market Authority of Oman approved the extension of the deadline for public subscription to Aman Real Estate Investment Fund, till February 2, 2020. The IPO of Aman Real Estate Investment Fund had initially been floated from January 2-16. The Fund has 100 million units open for public subscription, each valued at 100 Baizas. These units constitute 50 per cent of the Fund’s total capital and they are offered to investors at a rate of 102 Baizas.

Oman will introduce VAT “sometime during the beginning of the year 2021”, the country’s Minister of Commerce and Industry said. The introduction is “something that people don’t like, but this is something that we have been lobbying for”, he said in an ‎interview on the side-lines of the World Economic Forum in Davos last week. All six members of the Gulf Cooperation Council agreed in 2016 to introduce a 5 per cent rate of VAT but so far only three ‎states have done so. Saudi Arabia and the UAE both introduced the tax in January 2018 and Bahrain followed suit last year. Oman, whose economy witnessed slowdown in recent years following the collapse in oil prices in 2014, ‎ held off from introducing VAT so far despite calls from the International Monetary Fund to speed up its roll-out. ‎

With all the companies announcing their initial net earnings for the year 2019, overall earnings for 99 companies whose fiscal year ends in December showed an increase of 2.8 per cent YoY (i.e. RO 16.5 million) at RO 605.2 million in 2019 compared to RO 588.7 million in 2018. Sector wise, the Service Sector posted highest growth in profit at 33.7 per cent to RO 158.3 million compared to RO 118.4 million in 2018. Financial sector earnings dropped by 2.1 per cent to RO 414.4 million in 2019 compared to RO 423.2 million in 2018. While the earnings of the industrial sector dropped by 31 per cent to RO 32.5 million in 2019 compared to RO 47 million in 2018.

Amongst the overall results, Oman banking sector posted a mixed performance for the year 2019. Bank Nizwa posted a 36 per cent YoY growth in its net profit for the year, with Sohar International Bank following suit at 17 per cent YoY. Ahli Bank grew its profit for the year by 7.6 per cent, Bank Muscat by 3.3 per cent and NBO by 1.6 per cent YoY. Both HSBC Oman and Bank Dhofar posted net profit declines of 6.7 per cent YoY and 40 per cent YoY respectively.

Alizz Islamic Bank posted the largest YoY decline in its net profit on a steep increase in its net expected credit loss charges. The total net profit posted by Oman banks for FY19 declined to RO 362.1 million, down by 4.6 per cent YoY. On quarterly basis, Sohar International Bank posted the best performance with a net profit increase of 26 per cent YoY and 43 per cent QoQ for 4Q19, while HSBC Oman posted the worst performance with a net profit decline of 45 per cent YoY and 46 per cent QoQ in 4Q19.

Recent data about telecom subscribers revealed that total Internet subscribers continued to increase as they were up by 12 per cent in 2019 to 475k compared to end of 2018 at 424k. Total fixed telephones lines grew by 5.7 per cent to 592k while total mobile subscribers declined by a per cent to 6.38 million. Active mobile broadband subscribers went up significantly in 2019 by 12 per cent to close the period at 4.60 million subscribers compared to 4.11 million at the end of 2018.

(Courtesy: U-Capital)