Muscat Daily

MSM posts weekly de­cline amid Q3 re­sults

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The bench­mark in­dex of the Mus­cat Se­cu­ri­ties Mar­ket (MSM) ended marginally lower last week, mainly driven by the an­nounce­ments of cor­po­rate re­sults for the third quar­ter of 2020.

Af­fected by weak fi­nan­cial re­sults of the in­dus­trial and fi­nan­cial sec­tors com­pa­nies, the MSM30 in­dex recorded a 0.29 per cent de­cline for the week.

Fi­nan­cial in­dex was down 0.66 per cent while In­dus­trial in­dex de­clined 0.72 per cent on weekly ba­sis. Ser­vices in­dex, how­ever, closed 0.3 per cent higher for the week. The MSM Shariah in­dex also de­clined 0.16 per cent.

Lo­cal news

Ray­sut Ce­ment Com­pany an­nounced the com­ple­tion of ne­go­ti­a­tions and of­fi­cially ac­quired 75 per cent shares in La­farge Hol­cim Mal­dives Ltd, a ce­ment ter­mi­nal lo­cated at Thi­la­fushi Island, Mal­dives, at a pur­chase value of US$8mn. Oman In­vest­ment & Fi­nance Com­pany (OIFC) re­ceived the Cen­tral Bank of Oman's ap­proval to op­er­ate as a pay­ment ser­vice provider (PSP). Ac­cord­ingly, within six months, OIFC will be re­quired to com­plete all le­gal re­quire­ments re­lated to ob­tain­ing the fi­nal ap­proval and re­quired li­cense in that re­gard. BP started the pro­duc­tion at the Ghazeer gas field project in Oman, sig­nif­i­cantly boost­ing the sul­tanate's do­mes­tic en­ergy sup­plies sev­eral months ahead of the sched­ule. The Min­is­ter of En­ergy and Min­er­als praised the project and called it a step to­wards Oman's 2040 Vi­sion in pro­vid­ing ad­di­tional en­ergy and di­ver­si­fy­ing the econ­omy. The to­tal daily pro­duc­tion ca­pac­ity from Ghazeer and Khaz­zan is ex­pected to rise to 1.5bn cu­bic feet of gas and more than 65,000 bar­rels of as­so­ci­ated con­den­sate, BP said. The com­pany said in March that the gi­ant field was ca­pa­ble of pro­duc­ing more nat­u­ral gas than had been ini­tially agreed un­der con­tracts for the first two phases of the Block 61 de­vel­op­ment. The value added tax (VAT) will be im­posed in the sul­tanate within 180 days i.e. in April 2021 from the date of pub­li­ca­tion of Royal De­cree No 121/2020 in the Of­fi­cial Gazette. The VAT is ex­pected to pro­vide an ad­di­tional source of sup­port to the state's gen­eral fi­nance. It is also ex­pected to en­sure the qual­ity of pub­lic ser­vices and en­hance the re­al­iza­tion of the sul­tanate's goals of di­min­ish­ing de­pen­dence on oil and other hy­dro­car­bon sec­tors as main sources of rev­enues. There are se­lected items that are not sub­ject to the stan­dard VAT rate of 5 per cent, in­clud­ing: ex­ports (zero-rated), school fees set out in the reg­u­la­tions (ex­empted), cer­tain health­care ser­vices (ze­rorated), sale of bare, (e.g. va­cant land) (ex­empted), and cer­tain fi­nan­cial ser­vices such as a life in­surance pol­icy (ex­empted).

As per the Cen­tral Bank of Oman's lat­est monthly bul­letin, Oman re­ported a deficit of RO1.55bn for the first seven months of 2020 com­pared to RO1bn deficit in the same pe­riod of last year. Rev­enue dur­ing the pe­riod de­clined by 19.3 per cent to RO5.19bn com­pared to RO6.42bn in same pe­riod of last year. Ex­pen­di­ture on the other hand aided in con­trol­ling the deficit. Ex­pen­di­tures de­clined by 9.3 per cent to RO6.73bn in the first seven months of 2020 com­pared to RO7.42bn in the same pe­riod of 2019. In the month of July alone, Oman's to­tal rev­enues stood at RO358mn with oil rev­enue and gas rev­enue at RO62.7mn and RO82.3mn, re­spec­tively.

GCC and global news

In its lat­est World Eco­nomic Out­look re­port re­leased last week the In­ter­na­tional Mon­e­tary Fund (IMF) ex­pects al­most all the GCC coun­tries to re­port neg­a­tive GDP growth in 2020. In terms of re­cov­ery, Saudi Ara­bia is ex­pected to wit­ness sharp bounce back in 2021 and es­ti­mated to grow by 3.1 per cent next year fol­lowed by GDP growth of 2.5 per cent in Qatar. Oman is es­ti­mated to lead in terms of GDP growth in 2022 with growth of more than 11 per cent.

Pre­lim­i­nary data in­di­cates that global oil pro­duc­tion in Septem­ber decreased by 0.06mn bar­rels per day (bpd) to aver­age 90.71mn bpd com­pared with the pre­vi­ous month, and was lower by 7.83mn bpd on year-on-year ba­sis.

The to­tal OPEC crude oil pro­duc­tion av­er­aged 24.11mn bpd in Septem­ber 2020, down by 0.05mn bpd from the pre­vi­ous month.

Crude oil out­put inched up mainly in Libya, Iraq and Saudi Ara­bia, while pro­duc­tion decreased pri­mar­ily in the UAE.

The share of OPEC crude oil in the to­tal global pro­duc­tion re­mained un­changed in Septem­ber at 26.6 per cent com­pared with the pre­vi­ous month.

Rec­om­men­da­tion

In­ter­na­tion­ally, the mar­kets re­mained volatile last week on the news re­gard­ing the US stim­u­lus. We ex­pect such trends to con­tinue un­til the US pres­i­den­tial elec­tions. How­ever, the third quar­ter re­sults are ex­pected to drive the mar­kets in the com­ing days.

Re­gion­ally, the mar­kets will con­tinue to take cues from the in­ter­na­tional mar­kets and oil price move­ment.

Also, the earn­ings sea­son started but al­beit at a slow pace. We believe the mar­kets will be driven by re­sults in com­ing pe­riod re­gion­ally.

Lo­cally, we wit­nessed a mixed set of re­sults at the MSM. Over­all earn­ings for the nine months pe­riod were down on year-on-year ba­sis with ma­jor head­winds com­ing in from the COVID-19 re­lated chal­lenges. We ad­vise in­vestors to pick least af­fected com­pa­nies with healthy bal­ance sheet to ride off COVID-19 re­lated chal­lenges.

 ?? (Mus­cat Daily) ??
(Mus­cat Daily)

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