MSM index up backed by large caps amid revived investor interest

The MSM Market’s primary index rose towards the end of this week, primarily supported by large caps like banks and telecoms. This week, GCC investors were net buyers of about $21m worth of securities. The MSM30 Index ended the week up by 0.43 per cent at 4,004.86. All sub-indices were down: the Industrial closed down by 1.06 per cent, followed by Financial Index at 0.32 per cent and Services at 0.01 per cent. The Shariah Index also closed down by 1.11 per cent. MSM 30 tops the GCC indices in August as it went up by 6.5 per cent.
In the past week, values and volumes saw a notable increase mainly due to a special deal on Ooredoo Oman which announced that its major shareholder (Ooredoo Qatar) had executed a share transfer as part of an internal reorganisation of its 55 per cent shareholding in Ooredoo Oman from its fully owned subsidiary MENA Investcom SPC to its fully owned subsidiary Seyoula International Investment WLL, registered in Qatar. Both of these subsidiaries are ultimately owned by Ooredoo Qatar. Including this deal, the total value and volume of the special deals in this year as per the available data stood at RO 170.1 million for 515.2 million shares. Most of these deals were in the Financial Sector.
Galfar Engineering announced the award of a tender worth RO 9.2 million for infrastructure works‎ for Khazaen Economic City expected to be completed in eight months. The company expects reasonable income from this contract.
Oman’s Ministry of Commerce and Industry (MoCI) launched phase two of the Industrial Strategy 2040, in collaboration with the United Nations Industrial Development Organization (Unido). The second phase aims at identifying the policies and tools required for the successful implementation of the strategy. After the success of phase one in outlining the status of the industrial sector and the government priorities in the next stage regarding high technologies, capital-intensive and resource-based industries, and identifying challenges and obstacles ahead, phase two will focus on drafting a timetable and mechanisms for achieving these priorities.
As per the CBO’s latest statistical bulletin, the Omani Rial Domestic Interbank lending rate rose by 80bps YoY and 8bps MoM in June 2019, to 2.74 per cent. A daily average lending amount of RO 79.1 million was recorded during the month of June 2019, +185 per cent YoY and -0.7 per cent MoM.
Latest CBO data for conventional banks indicates that the weighted average interest rate spread (lending rate minus deposit rate) on Omani Rial softened by 5.0bps on year-on year basis (YoY), at 3.473 per cent for the month of June 2019, as weighted average YoY deposit rate growth outpaced YoY lending rate growth. On month-on-month (MoM) basis, the spread increased by 1.7bps as lending rate rose by 2.8bps and deposit rate increased by 1.1bps.
Weighted average FCY spread softened by 5.1bps on month-on-month (MoM) basis in June 2019 (at 3.535 per cent) over the previous month. The spread is lower by 5.1bps when compared to June 2018, and has been contracting steadily over the last few months.
Weighted average interest rate on private sector RO time deposits softened by 1.9bps MoM in June 2019, and increased by 19.9bps YoY, to 3.787 per cent which is below the average of 3.803 per cent over the previous three months. Weighted average interest rate on all private sector deposits (RO), rose to 1.424 per cent (+2.6bps MoM and +12.9bps YoY) in June 2019 when compared to an average of 1.386 per cent over the previous three months.
Recent data from NCSI Oman indicates that the country’s population has declined by 0.4 per cent till July 2019 as compared to December 2018, on account of a 3.0 per cent YTD decline in expatriate population, in spite of a 1.7 per cent YTD increase in Omanis.
Among GCC markets, Qatar Exchange tops the gainers up by 3.17 per cent while Saudi Stock Exchange dropped the most by 5.04 per cent.
‎Within the GCC, an analysis of data compiled from Bloomberg on UAE listed real estate companies reveals that the combined net profit of selected (those whose H1 2019 financial statements are available) companies dropped by about 23 per cent YoY to AED 4.25 billion in H1 2019. In Q2 2019, combined net profit was AED 1.86 billion (down by 23 per cent YoY and 22 per cent QoQ), on account of an 11 per cent YoY and 3.3 per cent QoQ drop in revenue, along with higher expenses. The lion’s share of this profit was contributed by Emaar Properties, followed by Aldar Properties.
The UN Conference on Trade and Development (Unctad) recently published its World Investment Report (WIR) 2019. Published annually since 1991, WIR covers the latest trends in foreign direct investment (FDI) around the world and analyses in-depth select topics related to FDI and development. Although the report highlighted that FDI across the world dropped by 13 per cent in 2018 to $1.3 trillion, it found that developing countries witnessed a slight uptick of 2 per cent. In total, the developing world received 54 per cent of global FDI flows, which the report labelled as record-breaking. Saudi Arabia and Bahrain topped the list of Gulf countries with FDI inflows of $3.2 billion and $1.52 billion respectively.
(Courtesy: U-Capital)