MSM declines despite good dividend announcements

Calm trades have again dominated the market despite good dividend announcements and positive economic statements. Special deals have been observed and liquidity has been concentrated in few stocks, resulting in lower market depth. The MSM30 closed the week down by 1.03 per cent at 4,109.34. All key sub-indices ended down led by the Services Index (-1.49 per cent), then the Financial Index (-1.01 per cent) and the Industrial Index (-0.34 per cent). The MSM Shariah Index closed down by 0.66 per cent w-o-w.
Salalah Mills Co received the full-remaining balance of government subsidy worth about RO 2 million from the Ministry of Finance. This represents 50 per cent of full balance related to wheat and flour subsidy. The company’s net profit went down by 25.5 per cent in 2018 to RO 2.92 million.
BankDhofar announced the successful conclusion of RO 40m in the form of unsecured Perpetual Subordinated Bonds as Additional Tier 1 Capital Instruments, denominated in Omani rials. The issuance, which was completed on a private placement basis, was oversubscribed, with the bank receiving applications for an aggregate amount of RO 42.45 million towards the issue size of up to RO 40 million.
OPWP notified Sohar Power that it has pre-qualified its power only offer but did not pre-qualify its Power and Water offer. Therefore, the company will not be able to extend the operations beyond the term of the current PWPA ending in March 2022. This situation has triggered an impairment review of the desalination plant, which resulted in an impairment loss of RO 18.6 million to be recorded in financial year 2018. The impact is unaudited and requires confirmation from the external auditors.
Shell Oman Marketing Co and Al Maha Petroleum announced that they received a letter of intent to supply Oman Air with aviation fuel with a volume share of 50 per cent commencing March 1, 2019 for a period of two years. Post the announcement of Oman Air Aviation contract for aviation fuel supplies.
In the weekly technical analysis, the technical indicators show that MSM30 index will face initial support at 4,090 points (according to our previous report). Currently, closing the index below the level of 4,109 points will press it to touch the mentioned support level. At present, stock price levels remain very attractive to investors, especially long-term investors, in conjunction with the dividend season.
The value of special deals in the last week stood at RO 4.7 million resulting in total value of the special deals on YTD basis at RO 23.6 million compared to RO 2.3 million for the same period in 2018.
As per Oman News Agency, initial estimates for Oman 2018 general budget deficit is RO 2.7 billion compared with budgeted RO 3 billion, i.e. a decline of 10 per cent and versus an actual 2017 deficit of RO 3.75 billion. Similar estimates showed that 2018 total revenue will reach RO 10.9 bn compared with budgeted figure of RO 9.5 billion (+14.7 per cent), at the same time, total expected expenditure will be RO 13.6 billion, up by 8.8 per cent compared with the budgeted figure of RO 12.5 billion.
Tanfeedh, which seeks to accelerate Oman’s economic diversification, last week announced that 69 per cent of industrial projects were completed at the end of 2018. The Minister of Commerce and Industry said that the number of industrial projects under Tanfeedh had touched 26, some of which have reached various stages of production. Implementation of the projects reached 40-90 per cent depending upon the nature of each project. GCC indices dropped in the last week except Saudi Stock Exchange which closed up by 0.16 per cent while the most drop posted by Qatar Exchange (5.37 per cent).
Within the GCC, analysis of banks for FY18 earnings (for those banks which have disclosed FY18 results so far) indicates that the Kuwaiti banks posted the highest increase in their net profit at 18.6 per cent YoY, followed by UAE banks at 17.5 per cent, Omani banks at 11.5 per cent YoY, Saudi banks at 11.2 per cent YoY, Qatar at 10.1 per cent YoY and Bahraini banks at 6.8 per cent YoY. The total GCC banking sector posted a total net profit of $34.3 billion in FY’18, up by 13.6 per cent YoY. On quarterly basis, total GCC banking sector net profit touched $8.4 billion in Q4’18 (-4.0 per cent QoQ; +12.1 per cent YoY). Saudi banks contributed 36.3 per cent to the total net profit, followed by UAE at 32.8 per cent, Qatar at 18.1 per cent, Kuwait at 8.7 per cent, Oman at 2.9 per cent and Bahrain at 1.3 per cent.
Globally, US national debt topped a record $22 trillion last week, less than a year after it crossed the $ 21trillion mark, indicating a further deterioration in the nation’s finances. US national debt has risen by $1 trillion in the past 11 months. The US national debt soared in the aftermath of the 2007-2009 recession, accelerated again after the Trump tax cuts in 2017 and an increase in federal spending.
Opec production has been on the decline since last four months. After registering a high of 32.9mbpd in Oct 2018 the production has declined to 30.8mbpd in Jan 2019, drop of over 2.0mbpd in four months. During the month of January compared to previous month, crude oil production averaged 30.81 mb/d in January, a decrease of 797 tb/d over the previous month. Crude oil output decreased mostly in Saudi Arabia, UAE, Kuwait and Angola, while production increased in Nigeria. Overall, global oil supply decreased by 1.03 mb/d to average 99.32 mb/d in January 2019, compared with the previous month.
— Courtesy: U Capital