Opec+ deal, stimulus measures lift MSM Index

MSM30 closed the week up by 1.93 per cent. Government support measures for the private sector, the OPEC+ deal and low share prices were the major reasons behind the rise during the week. Also supporting the market activity were the result announcements this week as almost a third of the companies have published their initial results.

All sub-indices closed up as well. Financial Index closed up by 1.19 per cent w-o-w, Services and Industrial index also closed up by 2.03 per cent and 1.02 per cent w-o-w, respectively.

The Competition Protection and Monopoly Prevention Centre approved the acquisition of Gulf Baader Capital Markets by Ubhar Capital SAOC. The approval was issued in cooperation with Capital Market Authority which approved the acquisition earlier.

Oman’s Finance Ministry has told all government agencies to cut their operating budgets by at least 10 per cent this year to counter a slide in oil prices, including by reviewing salaries and benefits. The move comes after the government cut the budget allocated to government agencies for 2020 by 5 per cent last month in response to the financial challenges the oil-exporting nation faces. All operational budgets would be reviewed and exceptional bonuses for state employees would be halted, according to the finance ministry. It said the decision applied to all ministries, agencies and public entities, as well as security and military bodies.

Oman has told its oil-producing companies to cut 200,000 barrels per day starting from May 1 until the end of June in line with OPEC+ crude supply reduction pact and will inform its customers of the same plan, its oil ministry said.

PDO’s transition to Energy Development Oman was approved last week. Energy Development Oman centres on a vision to reposition PDO from an essentially fossil fuels-based producer to a “fully fledged energy company”. The strategy envisions PDO’s diversification into, among other areas, solar and alternative energy development, energy management, low-carbon technologies, oil and gas consultancy services, and water management.

The CEO of Oman Power and Water Procurement Company (OPWPC) said that it has not so far been decided which electricity production companies will be decommissioned during the first phase of 2021. CEO said that gas stations whose contracts will expire by the end of 2021 still compete to produce the specified capacities. Setting the final required capacity will be closely associated with the growth or decline of demand, as per CEO, adding that capacities and bids are likely to be finalized during the second half of 2020.

Inflation in Oman dropped by 0.29 per cent YoY in March 2020 compared to the same month of 2019, according to the latest data released by the National Centre for Statistics and Information. The prices of furnishings, household equipment, and routine household maintenance fell by 0.06 per cent; housing, water, electricity, gas, and other fuels fell by 0.64 per cent; communication by 0.25 per cent; miscellaneous goods and services by 1.45 per cent in March 2020 compared to the same month of 2019. Inflation on a m-o-m basis fell by 0.51 per cent in March 2020 compared to February 2020.

Till the market close as of April 16, 38 companies whose year ends in December announced 1Q20 results. Overall, the profitability of the 38 companies declined by 7.7 per cent to RO 30.98mn compared to RO 33.5mn in 1Q19. Earnings of the financial sector stood at RO 9.83mn (-29.8 per cent), Industrial sector at RO 2.98mn (-34.9 per cent) and Services sector at RO 18.16mn (+21.3 per cent).

Regionally, Oman was the best market with a gain of 1.93 per cent while Saudi lost the most and was down by 5.35 per cent.

IMF issued its estimates for the GCC countries in its semiannual report. As per the estimates, almost all countries in GCC are expected to witnessed negative real GDP growth in 2020 mainly because of COVID-19 and the oil production cuts. Qatar real GDP is estimated to decline the most in 2020 by 4.35 per cent while the least will be of Kuwait by -1.1 per cent. In terms of current account balance to GDP, except UAE almost all countries will have a negative current account balance to GDP in 2020 and 2021. UAE current account balance to GDP has been estimated by IMF at 1.52 per cent and 4.09 per cent for 2020 and 2021, respectively.

[Courtesy: U-Capital]