Volatility and caution are factors in investment decisions

The volatile performance of the financial market was the result of conflicting factors, including the movement of investors between regional markets, high volatility in the oil market, ratings actions, and local macro and company news. It was noted that local and foreign institutional investors were net sellers and the market registered some special deals.

MSM30 closed the week up by 0.18 per cent at 4,344.47. The Financial Index was the only gainer, closing up by 0.18 per cent WtW while the Industrial Index and the Services Index ended the week down by 2.87 per cent and 0.43 per cent respectively. The MSM Shariah Index also closed down by 1.65 per cent w-o-w.

In response to the disclosure by Commercial Bank of Qatar, the largest shareholder of National Bank of Oman (NBO), about its reluctance to support the proposed merger between NBO and Bank Dhofar, the NBO said that it would consider the interests of all its shareholders in assessing the merits of the merger. For its part, Bank Dhofar said it noted NBO’s filing on the matter.

Oman Education & Training Investment Co posted healthy 1Q results (the quarter ends November) which showed an increase of 10.3 per cent in net earnings at RO 0.658 million.

In the weekly technical analysis, as mentioned in our last recommendation, the MSM30 index reached the level of 4,330 points (support level). Currently, the technical indicators show the MSM30 index cross up the level (30 points) of the RSI which is positive indicator. The index has a support level at 4,280 points and a resistance level at 4,380 points.

Last week, a special deal was made on National Finance worth nearly RO 9.76 million, resulting in total value of special deals during 2018 at RO 130 million, down by 37 per cent YoY. Deals were mainly in the Services Sector, followed by the Financial Sector then the Industrial Sector as per the below graph. Ominvest disclosed that it has increased its shareholding in National Finance Co to 34.6 per cent after getting the approval from the Central Bank of Oman and Capital Market Authority.

As per MSM, total market value of the corporate bonds/Sukuk that got listed in 2018 stood at RO 237.3 million, up by 5.3 per cent compared to the bonds/Sukuk that got listed in 2017. Ominvest Perpetual Bonds formed the highest share with 25.6 per cent of the total value.

Locally, Oman public finance figures showed a deficit of RO 2.04 billion, down by 36.1 per cent for 10M’18 on better net oil and gas revenue, as per latest monthly bulletin published by National Centre for Statistics and Information. Total revenues went up by 32.2 per cent to RO 8.7 billion supported by higher earnings from most segments especially net oil revenue which formed 61.8 per cent of total revenues and went up by 46.9 per cent YoY (i.e. RO 1.7bn) on better oil price (averaging $67.2/BBL compared with $50.6/BBL for the same period last year. Total expenditures went up by 7.2 per cent on yearly basis to RO 10.1 billion and actual expenditures under settlement increased by by 81.6 per cent. To finance the deficit, the government used means of financing covering net loans (68.4 per cent of total financing), net local loans (18 per cent of total financing) and the balance went to financing from reserves. In absolute numbers, the means of financing stood at RO 2.2 billion, down from RO 4.96 billion for same period in 2017. Till 10M’18, Interests paid on Loans were RO 402 million, up by 94.1 per cent YoY (i.e. RO 195 million).

The board of directors of the Capital Market Authority (CMA) adopted the executive regulations for Takaful insurance and the mandatory health insurance in the private sector. Further, the Board adopted a regulation requiring public listed companies to distribute cash dividends through Muscat Clearing and Depository Company in order to provide a unified center for monitoring all cash returns from all listed companies.

Data published by the National Centre for Statistics and Information with respect to major importers of non-oil Omani exports showed that UAE topped the importers during 8M’18 with market share of 19.9 per cent followed by Saudi Arabia (12.7 per cent). Qatar on the other hand, came as key importer for non-oil Omani exports as its share of the total exports went up to 10.2 per cent in 8M’18 from 5.3 per cent in 8M’17. The non-oil Omani exports stood at RO 2.65 billion in 8M’18, up by 25.6 per cent YoY.

Bahrain Bourse topped the gainers up by 0.63 per cent while Dubai Financial Market was the biggest loser closing down by 1.61 per cent. Saudi banks reach SAR 16.8 billion settlement over long standing Zakat for the previous years until the end of 2017. According to available data, Al Rajhi Bank, will pay the highest amount of 5.4 billion riyals (about 32 per cent of the total settlement) while Alinma bank will not pay any settlement. The news resulted in pressures on related stocks. More details in the following table:

Bahrain intends to exclude oil products from value-added tax (VAT) due to be implemented next year. It worth stating that the country’s annual growth in gross domestic product (GDP), adjusted for inflation, slowed in the third quarter of this year as both the oil and non-oil sectors lost momentum, as per Reuters. GDP grew 1.6 per cent from a year earlier in the third quarter, slowing from 2.5 per cent in the second quarter.

(Courtesy: U-Capital)