MSM30 de­clines as cau­tious sen­ti­ment pre­vails

Muscat Daily - - BUSINESS -

In­vestors at the Mus­cat Se­cu­ri­ties Mar­ket (MSM) re­main cau­tious and watch­ful amid the on­go­ing earn­ings sea­son, af­fect­ing trad­ing vol­umes and mar­ket turnover. An­nounce­ment of cor­po­rate re­sults and pres­sures from the re­gional mar­kets con­trib­uted to in­creased losses in the re­gional fi­nan­cial mar­kets last week.

The MSM30 in­dex de­clined 0.8 per cent on weekly ba­sis. Fi­nan­cial in­dex led the losses clos­ing down by 1.38 per cent. This was fol­lowed by In­dus­trial in­dex which lost 1.1 per cent, while Ser­vices in­dex de­creased 0.89 per cent. The MSM Shariah in­dex closed down by 1.02 per cent on weekly ba­sis.

At the MSM, the daily av­er­age turnover in the first nine months of 2018 stood at RO3.4mn which is 7.5 per cent lower on yearly ba­sis.

Lo­cal news

Aim­ing to sup­port the trad­ing ac­tiv­i­ties, the MSM board of di­rec­tors ap­proved to ex­tend daily trad­ing ses­sion to be of four hours, start­ing from 10am to 2pm. This come on a re­quest of the bro­ker­age firms. The trad­ing ses­sion ex­ten­sion will be for a trail pe­riod of six months start­ing from Novem­ber 1.

SMN Power Hold­ing an­nounced that a small fire broke out in the load volt­age (LV) switchgear room at the Barka II plant. The es­ti­mated fi­nan­cial im­pact to date amounts to RO200,000 be­cause of shut­ting down of the de­sali­na­tion plant. Re­fer­ring to a pre­vi­ous dis­clo­sure re­gard­ing the op­er­a­tions of the Barka II de­sali­na­tion plant af­ter fire broke out in the LV switchgear room, SMN Power Hold­ing re­ported that the plant was op­er­a­tional on Oc­to­ber 8 and that the ex­pected fi­nan­cial loss due to this event is about RO385,000.

In a step to at­tract more for­eign di­rect in­vest­ments, Nama Hold­ing an­nounced the launch of a pri­vati­sa­tion pro­gramme for Nama Group’s elec­tric­ity trans­mis­sion and distri­bu­tion com­pa­nies. Dur­ing a press con­fer­ence in Lon­don, the com­pany stated that the par­tial pri­vati­sa­tion of the trans­mis­sion com­pany and one of the distri­bu­tion com­pa­nies through an in­ter­na­tional strate­gic part­ner. Nama Hold­ing an­nounced the sale of upto 49 per cent of Nama Hold­ing shares in Oman Elec­tric­ity Trans­mis­sion Co, and the sale of upto 70 per cent of Nama Hold­ing shares in its distri­bu­tion and sup­ply com­pa­nies re­spec­tively: Mus­cat Elec­tric­ity Distri­bu­tion Co, Ma­jan Elec­tric­ity Distri­bu­tion Co, Ma­zoon Elec­tric­ity Distri­bu­tion Co, and Dho­far Power Co.

The Un­der­sec­re­tary of the Min­istry of Oil and Gas said that Oman has the ca­pac­ity to raise the ceil­ing of its pro­duc­tion of oil by about 40 thou­sand bar­rels per day, a share that was pre­vi­ously re­duced in ac­cor­dance with the agree­ment with the oil pro­duc­ing coun­tries from OPEC and other pro­duc­ers. He added that the in­crease in pro­duc­tion is linked to the agree­ment be­tween OPEC and other pro­duc­ers to in­crease quo­tas in or­der to sta­bilise the oil mar­ket in the event of a short­age of sup­ply sig­nif­i­cantly. Oman’s daily av­er­age pro­duc­tion in the first nine months of 2018, as per the avail­able data, stood at 972,400 bar­rels.

As per the Cen­tral Bank of Oman’s (CBO) lat­est sta­tis­ti­cal bul­letin, the to­tal credit of the Omani bank­ing sec­tor (con­ven­tional loans and Is­lamic fi­nanc­ing) stood at RO24.27bn as at the end of July 2018, up by 6.3 per cent year-on-year and flat on month-on-month ba­sis. To­tal de­posits stood at RO22.28bn, up by 3.4 per cent year-on-year but down by 0.3 per cent month-on-month or RO64mn from Jun to July 2018.

GCC mar­kets

Within the GCC fi­nan­cial mar­kets, Saudi Stock Ex­change dropped the most post­ing weekly loss of 5.76 per cent while Qatar Ex­change was the least loser.

The In­ter­na­tional Mone­tary Fund (IMF) raised the eco­nomic fore­casts of all the GCC coun­tries for 2018 and 2019 in its lat­est World Eco­nomic Out­look re­port. The IMF at­trib­uted the up­ward re­vi­sion to a pick-up in non-oil eco­nomic ac­tiv­ity and a pro­jected in­crease in crude oil pro­duc­tion in line with the re­vised OPEC and OPEC+ agree­ment. In the GCC, Oman’s 2019 es­ti­mated GDP growth of 5.05 per cent would be high­est in the re­gion fol­lowed by Kuwait at 4.06 per cent in 2019. Saudi Ara­bia is es­ti­mated to grow at 2.3 per cent in 2018 and 2.43 per cent in 2019. UAE is es­ti­mated to grow by 3.66 per cent in 2019. Bahrain, which re­ceived US$10bn in fi­nan­cial aid last week from Saudi Ara­bia, Kuwait and the UAE, has em­barked on a fis­cal sta­bil­i­sa­tion pro­gramme. The IMF has pro­jected a 3.5 per cent GDP growth this year and 2.59 per cent in 2019 for Bahrain. While Qatar is ex­pected to grow by 2.82 per cent in 2019.

Qatar an­nounced last week that it has set aside US$2bn to at­tract multi-na­tional com­pa­nies to its fi­nan­cial cen­tre. In­ter­na­tional com­pa­nies that set up a hub in Doha will be pro­vided with free of­fices and tax in­cen­tives as well as seed cap­i­tal to cover five years of op­er­at­ing ex­penses. In re­turn, they will be ex­pected to give a com­mit­ment to stay in the coun­try for at least a decade. Qatar Fi­nan­cial Cen­tre’s (QFC) CEO said Qatar’s fi­nan­cial hub was tar­get­ing to launch the in­cen­tive plan in the first quar­ter of 2019 once all gov­er­nance struc­tures are in place. QFC will be tar­get­ing at least 1,000 com­pa­nies, with the in­ten­tion of cre­at­ing 10,000 more jobs by 2022.

Rec­om­men­da­tion

It is early to judge the per­for­mance of com­pa­nies as only a few have an­nounced their ini­tial re­sults. Also, we should con­sider the sea­son­al­ity and some ac­count­ing ad­just­ments in ad­di­tion to in­vest­ment losses be­yond the con­trol of com­pa­nies as a re­sult of pres­sures that af­fected the per­for­mance of fi­nan­cial mar­kets.

In­vestors are ad­vised not to be con­fused as the fun­da­men­tals of the econ­omy, an­nounced projects, up­com­ing pri­vati­sa­tion pro­cesses and even cor­po­rate re­sults are sup­port­ive fac­tors, thus in­vestors should be not in a hurry and should take a breather be­fore in­vest­ing.

Ex­ter­nal pres­sures are be­yond the con­trol of com­pa­nies and the ex­po­sure of some ex­ist­ing mar­kets is in fact an op­por­tu­nity to build in­vest­ment po­si­tions in those com­pa­nies whose busi­ness is not af­fected.

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