MSM Index declines as trading activity contracts

The MSM Market’s primary index declined by 0.18 per cent week-on-week on lower volumes and turnover as compared to the previous week. This week, Omani investors supported the market and were net buyers of about $3m worth of securities.
The MSM30 Index ended the week down at 3,997.75. The Services Index rose by 0.68 per cent and the Industrial Index rose by 0.39 per cent. The Financial Index was down by 0.09 per cent. The Shariah Index closed up by 0.82 per cent.
Raysut Cement announced during the week that its Board of Directors has approved the establishment of a Cement ‎Grinding ‎Unit in Duqm with a production capacity of 1 million ton of cement per annum. The estimated project cost is $30m, and the project work is expected to start on September 19, 2019.
Telecommunications giant Vodafone will become the third service provider in Oman after it signed an agreement on Thursday. In May 2019, the Telecommunication Regulatory Authority (TRA) announced that a memorandum of understanding had been signed between a group of investment funds in Oman and Vodafone.
Data from the Muscat Securities Market (MSM) showed that the month of August saw a slight exit of foreign institutional investment with a net sale of RO 1.2 million.
However, the presence of foreign institutional investment continued in the market during the first eight months of this year with a net buy of RO 4.19 million versus a net sale of RO 115.32 million during the same period of 2018.
It should be noted that the amendments and flexibility in the investment laws related to trading in the market, including the freezing of taxation on the dividends of companies has contributed to attract more foreign institutional investment to the market.
During the week, the Central Bank of Oman (CBO) raised RO 47.20 million by way of allotting treasury bills. The treasury bills are for a maturity period of 28 days, from Wednesday, September 4 until October 2, 2019. The average accepted price reached 99.840 for every RO 100, and the minimum accepted price arrived at 99.840 per RO 100. Whereas the average discount rate and the average yield reached 2.08571 per cent and 2.08906 per cent, respectively.
The interest rate on the Repo operations with CBO is 2.582 per cent for the period from September 3, 2019 to September 9, 2019 while the discount rate on the Treasury Bills Discounting Facility with CBO is 3.332 per cent, for the same period.
Within the Oman banking sector, total non-performing loans reached RO 727.2 million in Q2’19 for the six listed banks, up by 8.7 per cent YoY and 1.8 per cent, as current macroeconomic situation bites, especially on the real estate portfolios. Non-performing loans as a per cent of gross loans rose from 3.28 per cent in Q2’18 and 3.34 per cent in Q1’19 to 3.38 per cent in Q2’19. However, it must be noted, that within the GCC, Oman banks still sport a low non-performing loan ratio. Gross loans grew to RO 21.54 billion, up by 5.5 per cent YoY and 0.5 per cent QoQ as at the end of Q2’19. The largest increase in non-performing loans as a per cent of gross loans was seen in National Bank of Oman (NBO), with non-performing loans as per cent of gross loans jumping from 4.4 per cent in Q2’18 and 4.8 per cent in Q1’19, to 5.3 per cent in Q2’19. Expected Credit Losses (ECL) Allowance cover of the bank saw a decrease from 93.6 per cent in Q1’19 to 88.4 per cent in Q2’19, even though ECL allowance rose for the bank in absolute terms. Combined ECL Allowance cover for all six banks improved from 101.9 per cent in Q1’18 to 107.0 per cent in Q2’19. It was down from 110.2 per cent in Q1’19, primarily on account of a large quarterly drop in provision cover of Bank Dhofar from 144.6 per cent in Q1’19 to 112.2 per cent in Q2’19.
Oman Housing Bank (OHB) revealed that the total number of approved loans, which are supported by the government, during the first half of 2019 reached 630 loans, worth more than RO 26.8 million. The maximum housing loan offered by OHB is RO 60,000, and the repayment period is up to 25 years at a competitive rate of banking and administrative fees, which is considered the best in the local market.
Among GCC markets, Dubai Financial Market tops the gainers up by 4.8 per cent on weekly basis while Abu Dhabi Securities Exchange dropped the most by 1 per cent.
Within the GCC, an analysis of banks’ net loans data sourced from Bloomberg indicates that the UAE banks posted the highest increase in their combined net loans at 6.4 per cent YoY, followed by Oman banks at 5.6 per cent, Kuwait banks at 5.0 per cent YoY, Qatar banks at 3.4 per cent YoY, and Saudi banks at 2.9 per cent YoY. Bahrain banks posted a slight decline in their net loans at 0.4 per cent YoY. Total net loans of all listed GCC banks were $1,356 billion, up by 4.3 per cent YoY and 1.4 per cent QoQ.
UAE banks contributed 30.5 per cent to the total net loans, followed by Saudi at 28.2 per cent, Qatar at 20.6 per cent, Kuwait at 12.0 per cent, Bahrain at 4.5 per cent and Oman at 4.1 per cent.
(Courtesy: U-Capital)