MSM30 continues decline despite good macro factors

The benchmark continued its weak performance in the past week despite good dividend announcements and attractive valuations. This could be due to weaker investors’ appetite and GCC institutional selling. The MSM30 closed the week down by 1.31 per cent at 4,055.57. The Services Index led the declines within the sub-indices as it closed down by 1.92 per cent followed by the Financial Index (-0.31 per cent). However, the Industrial Index closed up by 0.28 per cent. The MSM Shariah Index closed down by 0.84 per cent w-o-w. The MSM total Return Index closed the week flat.
At a media meeting organised by the Ministry of Transport and Communications at Oman Convention and Exhibition Center last week announced that the third mobile operator will commence commercial operation in the second-quarter of 2020.
In the weekly technical analysis, as we mentioned in our last week report that MSM30 will cut the level of 4,090 points, which is already happening. Currently, the index has a strong support level at 4,040 points; closing below this level will press the index to touch the level of 4,000 point. At the moment, stock price levels remain very attractive for investment.
Till date, the total proposed cash dividend for the year 2018 is RO 296 million. The financial sector contributes 71.1 per cent to the total proposed amount, followed by services at 23.8 per cent and Industrial sector at 5.2 per cent. The total market proposed cash payout stands at 54.4 per cent with yield of 6.9 per cent. The services sector’s cash payout tops with 63.3 per cent of earnings proposed to be paid-out as cash, followed by Industrial sector at 53.0 per cent and financial sector at 52 per cent.
The financial sector leads in dividend yield on proposed dividends at 7.4 per cent, followed by the Services Sector at 6.0 per cent and Industrial at 5.1 per cent. Dividend yield offered by Oman is the highest within the GCC. Bahrain yield is at second position after Oman at 5.8 per cent, followed by 5.3 per cent offered by DFM and 4.8 per cent by ADX. Within the region, Saudi Arabia’s yield stands at lowest at 3.3 per cent.
As per CBO’s latest statistical bulletin, the total credit of the Omani Banking sector (conventional loans and Islamic financing) stood at RO 25.01 billion as at the end of Dec’18, up by 6.4 per cent YoY and flat on MoM basis. Total deposits stood at RO ‎‎23.2 billion, up by 7.8 per cent YoY but down by 2.0 per cent MoM. Total Loan-to-Deposit Ratio reduced to 107.8 per cent in Dec’18 from 110.0 per cent a month ago. Conventional banks account for 85.7 per cent of total system credit at RO 21.5 billion as at the end of Dec’18, rising by 4.7 per cent YoY and declining by 0.2 per cent MoM.
Credit extended to the private sector remained stable on MoM basis and grew by 3 per cent YoY. Conventional deposits at RO 20.0 billion (+7.5 per cent YoY, +2.3 per cent MoM) form 86 per cent of the total banking deposits of Oman. Conventional Loan-to-Deposit ratio stood at 107.5 per cent, down from 110.1 per cent a month ago. Islamic credit stood at RO 3.57 billion (+17.8 per cent YoY, +0.6 per cent MoM) and Islamic deposits stood at RO 3.26 billion (+9.5 per cent YoY, 0.5 per cent MoM), with Loan-to-Deposit ratio stretching to 109.6 per cent in Dec’18 from 102.2 per cent in Dec’17.
Data related to foreign investments by sector related to the ownership showed that it reached 8 per cent in Jan’18 compared to an average of 8.9 per cent for 2018. Also, it came at 10.7 per cent in the Industrial sector versus an average of 10.8 per cent for 2018. However, it remained flat at 17.9 per cent in the Services Sector.
According to Oman News Agency, Minister of Tourism said that the added value of the Tourism sector amounted to RO 912 million at the end of 2018, compared to RO 728 million in 2017, a annual increase of 25 per cent.
He added that the sector’s share in GDP by the end of 2018 stood at 2.9 per cent compared with 2.6 per cent for 2017. It is key to note that among the strategic objectives of the Sultanate is to increase the contribution of the tourism sector in GDP to 6 per cent by 2040.
Dubai Financial Market topped the gainers posting a weekly gain of 3.95 per cent while the most drop posted by Muscat Securities Market.
The Real Estate Development Fund (REDF) in Saudi Arabia is now offering Saudi women mortgages or property loans without requiring an original beneficiary. REDF’s new regulations will allow Saudi women to borrow, even if they are not married or the sole provider in their homes. The move aims to support women looking to own their homes. It is also part of the Kingdom’s wider housing initiative, which looks to increase Saudi home ownership to 60 per cent by 2020, and 70 per cent by 2030.
Last week a consortium led by Kuwait’s National Investment Co and including the Athens bourse won a tender to acquire 44 per cent of the Kuwait stock exchange. While he remaining 50 per cent would be in the form of initial public offering and it will take place in the fourth-quarter of 2019 or the first quarter of 2020, said Commissioner of the Capital Markets Authority and vice chairman of the bourse’s privatization committee.
(Courtesy: U-Capital)