The MSM Index performed strongly during the past week, which also saw speculative activities targeting small cap companies, interest focusing on companies that paid dividends and some block deals as well. The MSM30 closed the week up by 1.91 per cent at 4,152.70. Among the sub-indices, the Financial Index was the best performer rising 2.78 per cent, followed by the Industrial Index (+0.45 per cent) while the Services Index closed down by 0.09 per cent. The MSM Shariah Index closed up by 0.03 per cent w-o-w.
Oman Fisheries Company OFC, which is partly owned by the Omani government, says it will shortly commence commercial fishing operations with the planned acquisition of an industrial fishing vessel. The trawler, suited for pelagic fishing, is proposed to be the first in a series of vessels that will form part of the company’s commercial fishing fleet, said, Chairman of the Board of Directors.
Oman Euro Food Industries decided at the company’s EGM to (1) reduce number of Board members from 7 to 5. (2) The company will continue and not go ahead with liquidation under the support of the main shareholder. Also, negotiations are going on with a strategic investor.
The value of special deals in the last week stood at RO 1 million resulting in total value of the special deals on YTD basis at RO 22.1 million compared to RO 8.9 million for the same period in 2018.
In the weekly technical analysis, the MSM index deal above the level of mentioned level at 4,040 points, reversing its upward trend to reach 4,166 points, where the index expected to return back to the level of 4,137 points. Currently MSM index crossed down the 10-day moving average. Next period the MSM30 index will suffer from the dividend distribution season.
On the oil and gas front last week,Petroleum Development Oman (PDO) announced that it is planning to ramp up oil production to 670,000 barrels per day (bpd) in the next five years. This comes after PDO confirmed that 2018 yielded its highest oil output since 2005 of 610,170 bpd. Oman Oil & Orpic Group is looking to ramp up the market capitalisation of its combined assets to $30bn by the year 2030, up from around $16bn presently.
The Central Bank of Oman (CBO) has decided to allow banks to reckon fund-based credit facilities sanctioned to government initiated/formally accredited funds/entities set up for the development of SMEs, for the purpose of on-lending to and for promotion of SMEs, as part of bank SME lending — up to a maximum of 1 per cent of the minimum stipulated 5.0 per cent of total credit subject to proper due diligence.
CBO is weighing changes to the Omani Banking Law with the aim of encouraging Islamic Banking Windows to become full-fledged Islamic banks in their own right. The Director of Islamic Banking at the apex bank noted that given the healthy growth of the Islamic banking industry in Oman over its relatively brief six-year history, Islamic Windows should consider transitioning into independent Islamic banks.
Foreign trade data indicates trade surplus of RO 4.36 billion during 9M’18, up by 135 per cent YoY (9M’17; RO 1.85 billion). The healthy surplus came on the back of strong merchandise exports growth as it increased by 31 per cent YoY compared with recorded merchandise imports growth of 4 per cent during the same period. Export segments include Oil and Gas and Non-Oil were up by 43.4 per cent and 25 per cent respectively while Re-exports went down by 6.3 per cent. Oil & Gas forms 64 per cent of the total Merchandise Exports in 9M’18 followed by Non-Oil (25 per cent) and then Re-Exports (11 per cent).
Kuwait Stock Exchange topped the gainers up by 3.22 per cent while Qatar Exchange was the only loser closing down by 0.17 per cent.
Saudi market has been performing well this year on the back of index inclusions by index providers such as FTSE Russel, S&P DJ and MSCI. Year to date, Tadawul has witnessed net foreign inflows of $3.5 billion. On an average the market has witnessed net foreign inflows of $348m per week.
MSCI proposed to reclassify the MSCI Kuwait Index from Frontier to Emerging Markets and sent a consultation paper to fund managers around the world. The proposal is to implement the potential reclassification in one step coinciding with the May 2020 Semi‐Annual Index Review. Based on simulated result, 17 out of the 18 current constituents of the MSCI Kuwait IMI would be eligible using the Emerging Markets requirements. The simulated MSCI Kuwait Index would have a potential weight of 0.5 per cent in the MSCI Emerging Markets Index. If Kuwait gets MSCI upgrade, Oman weight in MSCI Frontier Market increases to 3 per cent from 2 per cent currently with 5 constituents.
Last week, UAE Central Bank announced that the country reported current account surplus rose to AED 139bn ($38bn) or 9.6 per cent of gross domestic product (GDP) in 2018, up from AED 101bn or 7.2 per cent of GDP in 2017 Central Bank attributed the increase mainly to higher oil prices, which rose from an average of $54.25 a barrel in 2017 to an average of $ 71 a barrel in 2018.
As expected, the US Fed decided to keep the rates unchanged and decided on no rate hike this year. Since the GCC currencies are pegged and would not resort to rate hike, the local banks will miss that edge of increasing spreads which generally materialises because of rate hike. The banks will have to resort to other measures and cost controls to grow their income. (Courtesy: U-Capital)
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