MSM declines on the back of foreign selling

The MSM 30 Index closed the week down on selling pressure from foreign investors. Absence of catalysts resulted in lower traded volumes as well as turnover. The MSM30 Index declined by 0.03 per cent on the weekly basis to 4,082.71. All sub-indices closed down except for the Services Index which went up by 0.37 per cent. The Industrial Index closed down by 0.58 per cent followed by the Financial Index (-0.18 per cent). The MSM Shariah Index closed down by 0.85 per cent w-o-w.

Al Anwar Holding transferred its entire stake in the five manufacturing companies to Al Anwar Industrial Investments SAOS (under formation), a 100 per cent owned special purpose vehicle (SPV) to be created with special purpose to manage these investments and divest partial stake in the SPV to strategic investors. As this transfer will be at the carrying value of the respective investments in the books of the company therefore no impact will be observed on the profitability of the company due to this transfer.

The Omani government’s pro investment policies are bearing fruits and we are witnessing the announcement of various multi-million dollar projects, which will not only aid in economic growth but will also be key in diversifying the economy and lowering the unemployment.

Last week, Suhar Industrial City, which falls under the umbrella of the Public Establishment for Industrial Estates (Madayn), signed an investment pact with Keryas Paper Industry. Keryas will be provided with land in Phase 7 of Suhar Industrial City to establish a paper recycling project. The project is the largest of its kind in the Sultanate and will be built on an area of 58,000 sqm at a total cost of up to $40 million, with a production capacity of up to 600 tons per day.

Additionally, Salalah Free Zone has signed a usufruct agreement to establish a $50 million manufacturing plant, with an annual production capacity to produce 1,500 buses. With the construction expected to start in the third quarter of 2020, the company, the name of which has not been disclosed, will provide around 350 direct jobs to Omanis. Nearly 70 per cent of the buses to be manufactured in the Salalah Free Zone will be exported to the Gulf, Yemeni, African and CIS markets.

Capital Market Authority (CMA) of Oman is weighing the introduction of a number of new products and instruments designed to enable, among others, small and medium enterprises to tap the capital market for their financing needs, while also creating new investment opportunities for the retail masses. According to a high-level official, these initiatives include Exchange Traded Funds (ETFs), Sukuk issuances based on a blockchain platform, and a crowdfunding platform for small investors. Such initiatives when implemented, will help support the development of a vibrant capital market and will also widen the investor base in the Sultanate.

NCSI recently published public finance numbers for the Jan-Sept period of this year. As per the available data:

n Deficit was down 19.4 per cent during 9M19 to RO 1.54 billion compared to RO 1.91 billion in 9M18.

n Revenue was up 2.5 per cent supported by growth in income taxes and other revenue; oil and gas revenue rose by almost 3.7 per cent.

n Expenditure was almost down by 1.8 per cent supported by drop in civil ministries expenditure and defense/security expenditure.

n As of August 2019, Government has additional surplus worth RO 361.6 million available to cover future deficit.

Amongst the GCC markets, the Saudi Market was the best performer during the week while Abu Dhabi Securities Exchange was the worst performing market down by 1.87 per cent.

GCC Telecom Sector profitability was up 5 per cent YoY but down 2 per cent QoQ to $1.97 billion in 3Q19. Except UAE and Bahrain, almost all countries witnessed increase in their net income both on QoQ and YoY basis. Oman recorded commendable performance on both YoY and QoQ basis as the profitability was up by 44 per cent YoY and 4 per cent QoQ to $75 million. Kuwait followed with YoY and QoQ profitability growth of 7 per cent and 6 per cent respectively. While Qatari telcos recorded profitability growth of 6 per cent YoY. Overall from the 15 companies which reported results, four companies reported higher growth on both QoQ and YoY basis namely: Omantel, Zain KW, Etisalat UAE and Ooredoo Qatar.

The UAE Cabinet last week approved a federal law to regulate cases of insolvency of natural persons or individuals – a move aimed at enhancing the competitiveness of the UAE by ensuring the ease of doing business, creating favourable conditions for individuals facing financial difficulties and protecting those who are unable to pay their debts from going bankrupt. In 2016, the UAE government had adopted a similar insolvency law for companies which was widely welcomed by businesses and financial institutions. The law, which will enter into force in January 2020, provides for engaging court appointed experts in assisting debtors and creditors to come up with a resolution plan to settle the outstanding debt.

(Courtesy: U Capital)