MSM30 continues posting gains with increased interest in key scrips

The general index has maintained its upward trend during the past week with the support of the institutional presence and improved investment appetite as the positive macroeconomic developments continue. The listing of Dhofar Generating Company supported volumes and values of trading.
MSM30 ended the week up by 0.3 per cent at 4,432.56. Both the Industrial Index and the Services Index closed up by 0.52 per cent and 0.1 per cent respectively while the Financial Index ended the week on flat basis. The MSM Shariah Index closed down by 0.79 per cent on weekly basis. As stated earlier, last week Dhofar Generating Company was listed in the financial market. The stock dropped by 6.22 per cent on the listing day and formed 56.7 per cent of the total traded values. However, the stock partially recovered ending the week at RO 0.212.
Locally, last week, the Central Bank of Oman (CBO) announced a new issue of government development bond (issue 58) which is the third this year. The size is RO 150 million with a maturity period of seven years and will carry a coupon rate of 5.75 per cent per annum. As per Oman News Agency, the issue will be open for subscription from September 11 to 20, 2018, while the auction will be held on September 23. The issue settlement date will be on September 25 and the maturity date on September 25, 2025. Available data showed that latest government development bonds with maturity of seven years was issued in November of 2017 (issue 55) and carried a coupon rate of 5.25 per cent and an average accepted yield of 4.91 per cent.
At the macro level, total refineries production in 7M’18 stood at 44.6 million barrel, up by 27 per cent on yearly basis mainly supported by higher production of Aviation Fuel Oil (up by 140.8 per cent on the same basis). Out of the total production, Gas Oil formed 39.5 per cent followed by both Aviation Fuel Oil and M-91 (each 18.2 per cent) then M-95 (15.7 per cent) and finally LPG (8.4 per cent). Domestic sales came at 62.5 per cent of the total production where the balance was exported.
Regarding petrochemicals production, NCSI data showed that the total production in 7M’18 stood at 693k MT, up by 16.7 per cent on yearly basis mainly supported by better production of all components. Domestic sales came at only 4.8 per cent of the total production where the balance was exported.
The CMA Executive President said that the process of transforming the Muscat Securities Market into a government-owned company is proceeding according to the plan and he hopes that it will be completed before the end of the year, adding that the matter is currently in the stage of obtaining approvals by some specialised governmental bodies. As we said in our earlier reports, we believe such move shows the commitment of the government towards privatisation, thus more involvement of the private sector in supporting and running the economy. We believe that the market’s transformation into a company will give investors the ability to predict the performance of the market, the company and the listed companies as the improvement of the company’s revenues which results from increasing volumes, values, listings or investments means an improvement in overall performance.
The conversion will have positive impact on the market performance in terms of better resources utilisation in order to achieve better profits and abide by commercial principles rather than non-profit ones. Being a company means greater flexibility in obtaining support from the government and the public sector, such as accelerating the process of listing large companies, which will support values, volumes and the financial market depth.
Buying in the company (i.e. Muscat Security Market) is similar to buying in index, which represents all companies’ performance, thus lowering the concentration risk. The expected IPO in later stage will subsequently motivate other companies, both government and family, to take similar step.
Unlike the week before the pervious week, the Kuwait Stock Exchange topped the gainers up by 0.33 per cent while Saudi Stock Exchange was the worst. News related to possible merger between Abu Dhabi Commercial Bank, Union National Bank UNB and Al Hilal Bank dominated deals in the UAE, last week. If successful, the merger will be the second in the UAE in 16 months, following the merger of two banks under the name First Abu Dhabi Bank. The merger of the three could create an entity with $113 billion in assets, data suggest. The following table shows the 10 largest banks in the region in terms of total assets.
Point-of-sale transactions in Saudi Arabia went up by 25 per cent YoY in July’18 to SAR 19.18 billion, figures from the Saudi Arabian Monetary Authority (SAMA) showed. This result in total sales of SAR 132.3 billion during 7M’18, up by 15.1 per cent compared with the same period last year. The transactions in July were processed through nearly 327.7 thousand points-of-sales. It is worth stating that in 2018, there were nearly additional 24.3 thousands points-of-sales compared with the end of 2017.
Bahrain has approved regulation allowing foreign companies to establish independent subsidiaries in the kingdom and do business without a local partner. Bahrain’s Cabinet formally endorsed the new rules last week, two years after the country approved 100 per cent business ownership in certain sectors. We believe this is the step in the right direction and will help the country in attracting more foreign direct investment and spur economic growth.
(Courtesy: U Capital)