Thursday, March 28, 2024 | Ramadan 17, 1445 H
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EDITOR IN CHIEF- ABDULLAH BIN SALIM AL SHUEILI

MSM at level last seen nine years ago

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Pressures (some are justified) continue hitting the financial market, which saw its lowest level in more than nine years. Last week the benchmark index dropped by 1.83 per cent at 4,440.80 which can be attributed to factors such as companies results, lack of market depth, lower oil prices and foreign investors fear about the outcome of US and China trade war and the consequences.


All sub-indices went down lead by the Industrial Index (-2.58 per cent), then the Financial Index (-2.37 per cent) and finally the Services Index (-1.25 per cent). The MSM Shariah Index closed down by 1.67 per cent.


In the weekly technical analysis, as we mentioned last report the MSM30 index broken down the first support level at 4,500 points and this what happen closing below this level is a negative indicator. In the technical analysis, the MSM index is still moving in downtrend channel to reach 4,414 points, the second support for MSM30 index stood at 4,386 points.


The two key telecom players in Oman i.e. Omantel and Ooredoo Oman announced updates about the mobile licence renewal. Omantel said that it has received a letter from Telecom Regulatory Authority of Oman (TRA) confirming acceptance of the company application to renew its first-class mobile telecom licence, which is due to expire on February 10, 2019. Omantel will engage with the TRA to discuss, understand and evaluate the licence renewal terms. On the other hand, Ooredoo Oman stated that it is currently assessing the proposed licence and terms of renewal and will discuss the same with its Board, the TRA and other relevant stakeholders.


Recent data about telecom subscribers revealed that total mobile subscribers stood at 6.68 million as of May’18, down by 3.7 per cent compared to 2017 mainly on lower pre-paid mobile subscribers’ base (-4.5 per cent YTD).


The Executive Board of the IMF concluded the Article IV consultation with Oman last week. IMF reported that, reflecting the lower oil price environment, Oman has posted double-digit fiscal and current account deficits over the past few years, leading to large increases in government and external debt. Against this backdrop, the authorities have launched reforms to bolster growth and diversification. The government’s diversification efforts and the planned completion of major infrastructure projects are expected to gradually raise non-hydrocarbon growth to about 4 per cent over the medium-term. Preliminary budget execution data point to a significant improvement in the fiscal position last year as higher oil prices and spending restraint brought the overall deficit down to below 13 per cent of GDP. The banking sector appears sound, with banks featuring high capitalization, low non-performing loans, and strong liquidity buffers.


Total announced 1H’18 initial net earnings so far, as per MSM, for the companies whose year ends on December showed a drop of 31.9 per cent on yearly basis to RO 19m mainly on Dhofar Int Dev & Inv Holding Co (DIDIC) which posted unrealized loss on financial assets at fair value and Al Jazeera Services which incurred an impairment charge on investment on an associate company. Sector wise, the Service Sector posted best results as its net profit stood at RO 26.55m for 1H’18 versus a net profit of RO 3.44m in 1H’17 on better performance by Renaissance Services as the company moved to profits from losses. The Industrial Sector total net earnings declined by 15.5 per cent on annual basis to RO 17.6m mainly pressurized by most of lead announced companies within the sector.


On a quarterly basis, the total market announced results indicates a net loss of RO 0.62m in 2Q’18 compared to a net profit of RO 23.3m for 2Q’17 due mainly to Dhofar Int Dev & Inv Holding Co. However, excluding the results of DIDI and Al Jazeera Services, both aggregated net profit for 1H’18 and 2Q’18 will be up by 103.4 per cent and 0.9 per cent respectively. We would like to highlight here that so far not many large cap companies have announced the results.


Kuwait Stock Exchange continued to top the gainers as it closed up by 2.47 per cent within the GCC region while Muscat Securities Market was the worst as it went down by 1.83 per cent.


The number of operating funds in Saudi Arabia stood at 262 funds with total assets of SAR 120.1bn as of 1Q’18 as per the CMA. Out of this, 79 per cent is invested in domestic assets. As per the data, investments were distributed among nine categories of which domestic money market instruments formed 47 per cent followed by domestic shares (18 per cent) and foreign money market instruments (11 per cent).


The Bahraini economy shrank 1.2 per cent year-on-year in the first quarter of 2018. It was the first contraction of the Bahraini economy since the last quarter of 2011. This was largely because the oil sector of the economy shrank 14.7 per cent from a year earlier. Meanwhile, the non-oil sector of the economy expanded a modest 1.9 per cent from a year earlier in the first quarter. The manufacturing and construction sectors grew on the back of rising aluminium exports and infrastructure projects partly funded with aid from Bahrain’s neighbours. But the financial sector, excluding insurance, shrank and the hotels and restaurants sector declined sharply. The figures increase concern about the health of Bahrain’s economy as it struggles with a current account gap and a large state budget deficit, which have dragged down prices of its international bonds and pushed the Bahraini dinar to a 17-year low against the US dollar late last month. [Courtesy: U Capital]


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