A number of events happened in the last week which impacted the trades and the market performance, including the general budget announcements, telecom sectors news, regional and global developments, and the movement of oil prices.
MSM30 closed the week down by 1.58 per cent at 4,275.62. All key sub-indices ended down led by the Financial Index (-1.37 per cent) then the Industrial Index (-0.83 per cent) and the Services Index (-0.5 per cent). The MSM Shariah Index also closed up by 0.18 per cent w-o-w.
An official at Telecommunication Regulatory Authority (TRA) said that the third mobile communication operator in the Sultanate (local partners) will be announced in early 2019. As of 3Q’18, mobile subscribers market share data showed that 41.8 per cent belongs to Ooredoo Oman and the rest i.e. 58.2 per cent is for Omantel (including mobile resellers —15 per cent). The entry of the 3rd mobile operators is expected to result in competitive atmosphere thus better services and more pressures on the products prices within the sector.
Oman Tower Company (OTC) has signed two pacts with Omantel and Ooredoo to build, lease and manage assets of towers in the sultanate. The move aims to unify the infrastructure of inactive communications, supporting the spread of the telecom towers and ease some pressures on the operations of the telecom providers allowing them to divert the excess investments towards other windows, which shall service the subscribers.
Gulf International Chemicals disclosed that it adopted an investment strategy in selected fields with total investments of around RO 200,000. The board of directors of the company has also decided to downsize operations in the UAE.
The board of directors of Salalah Mills Co took key decisions in the past week including recommending of 50 per cent cash dividends ( 50 Bz per share), approval of establishing an import and distribution company in the UAE as well as the Republic of Togo.
In the weekly technical analysis, the technical analysis shows that MSM30 index will reach the level of 4,280 points (first support level). Currently MSM30 index preparing in building positions at this levels
The key event in the previous week was the 2019 general budget announcement. The budget (despite cautious steps that were taken) is an expansionary one with main focus on the financial sustainability, raising the efficiency of spending and continuing to stimulate the national economy and maintain the level of basic services.
Budget key highlights include:
n Total budgeted revenue stands at RO 10.1 billion, up by 6.32 per cent versus 2018 budgeted figures
n Oil revenue budgeted at a price of $58/bbl. for 2019. Average daily production of 970k/barrel (considering the commitment to reduce the planned production of oil in accordance with the decision of the Organization of Petroleum Exporting Countries (Opec).
n Total budgeted public expenditure stands at RO 12.9 billion, up by 3.2 per cent compared to 2018 budgeted figures. It is lowered compared to the estimated actual spending of 2018 at RO 13.2 billion.
n The 2019 budgeted deficit is forecasted at RO 2.8 billion (lowest on budgeted basis since 2015).
n 71 per cent of the estimated deficit to be financed by Net Foreign Borrowing (70 per cent for 2018 budgeted figures)
The budget contains several figures that we will analyse and issue a detailed report soon. Further, financial measures taken to address the budget deficit and control the financial situation were also discussed. There was also focus on Tanfeedh programme, economic diversification and spending on the investment projects which is estimated at RO 3.7 billion.
Recent data published by the National Centre for Statistics and Information (NCSI) showed that the daily average production of 11M’18 went slightly up by 0.8 per cent YoY to 977.1k while the average price per barrel jumped by 35 per cent to $ 68.7. The average export percentage of the total production stood at 82.6 per cent in same period compared with 83.3 per cent during 11M’17. China remains the top importer of Omani crude with an 82.8 per cent share, followed by India (7.6 per cent) then Japan (5.8 per cent).
Dubai Financial Market topped the gainers up by 2.29 per cent on weekly basis while the Muscat Securities Market was the only loser.
Saudi government reserves dropped by 1.95 per cent MoM in Nov’18 to SAR 561.4 billion, the lowest level since January 2009, according to Saudi Arabian Monetary Authority (SAMA) data. On the other hand, the government current account increased by 6.31 per cent MoM in Nov’18 to SAR 63.15 billion.
Dubai announced 2019 budget. General revenues are estimated at AED 51 billion this year, up 1.2 per cent from 2018. State spending will total AED 56.8 billion, a marginal increase from last year’s original budget plan of AED 56.6 billion. The 2019 budget projects a deficit of AED 5.8 billion, down slightly from the projected 2018 deficit of AED 6.2 billion. The budget focuses on infrastructure and social development and the government aims to create 2,498 new jobs in the public sector, which shall bring positive sentiment.
Globally, US pending home sales post unexpected decline in November signalling that the housing market is struggling. According to data published by the National Association of Realtors in Washington, the Index of pending home sales decreased by 0.7 per cent MoM. It is key to mention that the index represents contract signings to purchase previously owned US homes.(Courtesy: U-Capital)
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