The MSM 30 Index continued to decline as has been the trend over the last couple of weeks, primarily on selling pressure from foreign investors. Foreigners were net sellers of about $3.7 million worth of securities this week.
The MSM30 Index declined by 0.23 per cent w-o-w to 4,019.67. All sub-indices closed down, led by the Services Index which closed down by 0.99 per cent, followed by the Industrial Index which closed down by 0.98 per cent, and the Financial Index which closed down by 0.22 per cent. The MSM Shariah Index also closed down by 0.84 per cent w-o-w.
Al Fajar Al Alamia announced completion of formalities for acquisition of 50 per cent of shares of Awam Materials LLC. Awam Materials LLC has a mining licence for a gypsum quarry at Thamrait. This acquisition is part of the expansion plan that will add value to the group.
Renaissance Services’ shareholders approved reduction in capital to RO 23.6 million from RO 36.7 million to offset accumulated losses. The stock reacted positively, and closed the week down by 0.66 per cent.
Oman’s 10-year bond (OMAN 5 5/8 01/17/28) mid-yield to maturity is currently below its all-time average of 6.205 per cent. Lowest reading was recorded on January 26, 2018, and the current reading is at 5.497 per cent. The highest reading recorded was at 7.547 per cent on January 2, 2019. Oman’s policy rates move in tandem with the US Fed rates (because of the US dollar-Omani riyal peg) and CBO’s repo rate decline is attributable to recent Fed rate cuts. The US Fed has maintained current rates this week and is expecting no change in 2020 citing the US Presidential Elections and other trade-war related uncertainties as key reasons. Oman’s 10Yr mid-yield can be used as a proxy for risk-free rate of Oman, and it is currently indicating easing of risk-free rate for Oman.
Oman Cable industry SAOG has signed an agreement with Takamul Investment Company LLC to acquire 49 per cent stake of the capital of Oman Aluminium Processing Industry LLC (OAPIL) owned by Takamul, the acquisition value was estimated at RO 3.2 million, to be financed from the company’s normal available resources.
An analysis of Oman’s listed banks shows that the total net loans reached about RO 21.7 billion and total deposits reached about RO 20.4 billion as at the end of 9M’19. Amongst the 8 banks, HSBC Oman posted the highest quarterly growth in net loans at 5.6 per cent, followed by Ahli Bank at 3.7 per cent, Sohar Int Bank at 2.7 per cent, and Bank Nizwa at 1.0 per cent. Alizz Islamic bank was flat on Islamic Financing asset growth. The rest of the banks posted declines in net loans on QoQ basis, with NBO at 1.4 per cent, Bank Muscat at 1.3 per cent, and Bank Dhofar at 0.8 per cent. On YOY basis, Bank Nizwa led the pack in terms of net loan growth, at 31.1 per cent YoY, followed by Sohar Int Bank at 11.5 per centYoY, Ahli Bank at 10.2 per centYoY, Bank Muscat at 5.3 per cent YoY, Alizz Islamic Bank at 4.2 per cent YoY, HSBC Oman at 2.6 per cent YoY, and Bank Muscat at 1.3 per cent YoY. Bank Dhofar was the only bank to post a net loan decline on YoY basis at 4.4 per cent YoY.
For Islamic banks, the comparative asset to net loans is net
Islamic financing, and for deposits it is profit-sharing investment accounts.
Till date, tenders worth of about RO 819.7 million were awarded according to available database. This represents an annual increase of 270 per cent compared with 2018. Major contracts were for in health sector, education sector and infrastructure. The 2nd quarter registered the highest value of awarded tenders with contribution of 37.3 per cent followed by the 3rd quarter with 27.5 per cent then the first quarter with 25.7 per cent and lastly the 4th quarter with 9.5 per cent.
The total value of special deals carried out on the Muscat Securities Market till date has exceeded RO 204.7 million, i.e. a yearly increase of 57.7 per cent. Most of the deals were carried out within the Services sector and the Financial sector.
Amongst the GCC markets, Saudi Stock Exchange was the best performer during the week while Qatar Exchange was the worst performer, decreasing by 0.98 per cent w-o-w.
Saudi Aramco shares debuted on Tadawul on Wednesday, opening limit up i.e. 10 per cent with a massive number of bids which outnumbered sellers. The state oil company began trading on Riyadh’s Tadawul stock exchange, giving the group a market value of nearly $1.9tn. Saudi Aramco’s shares rose by the maximum level with bids at 35.2 riyal, confirming its position as the world’s most valuable company — more than the combined market capitalisation of the five biggest international oil companies.
The inclusion of the Saudi stock exchange in MSCI’s flagship emerging market index is also expected to provide long-term support for Saudi Aramco shares from passive funds.
Saudi Arabia is set to spend $272 billion (SR1.02 trillion) next year as the Kingdom embarks on a major privatisation push amid a widening budget deficit. Public spending on education, military and health and social development amounts to 53.1 per cent in 2020. The country is projecting its budget deficit for next year to widen as the world’s top oil exporter faces tumbling oil prices and production cuts, to $50 billion (SR187 billion) for 2020, for the seventh year in a row, up $15 billion on this year. It anticipates real GDP growth of about 2.3 per cent next year. Spending was projected at $272 billion, down 7.8 per cent on 2019 estimates while revenues were estimated at $222 billion, also lower by 14.6 per cent. The finance ministry added that actual spending in 2019 was $279.5 billion and revenues at $244.5 billion, leaving the same projected shortfall of $35 billion.
(Courtesy: U Capital)
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