MSX posts weekly gains as industrial stocks rise

The benchmark index of the Muscat Stock Exchange closed higher during last week, mainly supported by industrial sector stocks.

MSX30 Index ended the week higher by 0.26 per cent. While Industrial Index rose 0.19 per cent, Financial Index and Service Index closed down 0.3 per cent and 0.29 per cent, respectively. MSX Shariah Index closed higher by 0.22 per cent for the week.

Local news

▶Takaf▶l Oman Insurance announced that it has received regulatory approval from the Capital Market Authority for the rights issue of 150mn offer shares at a price of 41bz per share (consisting of issue price of 40bz and 1bz towards issue expenses). The board of directors of the company resolved that the record date of the rights issue shall be May 22, 2022. ▶Oman Fisheries Company announced to its shareholders that a commercial fishing agreement has been reached with the Irish company Atlantic Dawn in May 2022, for a period of three years. The partners aim to utilise the fishing quotas granted to the company by the Ministry of Agricultural, Fisheries Wealth and Water Resources in order to secure sustainable supplies in addition to enhancing export operations. Accordingly, Atlantic Dawn will bring a small pelagic fishing vessel targeting 30,000 metric tonnes of small pelagic that, if achieved, will result in improvement in financial performance and margins. It is anticipated that the ships will start fishing in Omani waters by the next fishing season in 2022.

▶Oman’s consumption of natural gas dropped by 8 per cent year-on-year in March 2022 compared to the same period of last year. Total production of natural gas increased to 4,136mn cubic meters (mncm) in March 2022 against 3,820mncm in the corresponding period of 2021.

▶The Authority for Public Services Regulation (APSR), which regulates the electricity sector, among other public utility services in the Sultanate of Oman, plans to shortly commission an audit of licensed power transmission and distribution companies to ensure that consumers are not impacted by poor quality power supply. The audit will form the basis of a new ‘Quality of Power Supply Regulatory Framework’ to help monitor compliance by transmission and distribution licensees with the technical requirements of quality of supply across their networks. A number of consultants are participating in a competitive tender launched by APSR for the selection of a qualified firm to undertake the proposed audit, as well as to develop the regulatory framework around it. Interested bidders have until Jun 6, 2022 to submit their proposals in this regard.

▶Islamic banking is continuing to grow rapidly in Oman driven by growing awareness about Sharia’a-compliant products, strong retail demand and supportive regulations. Total assets of the sultanate’s Islamic banks and windows grew by 10.7 per cent year-on-year to hit RO6bn mark in the first quarter of 2022, according to the Central Bank of Oman’s data released on Sunday. In terms of market share, Oman’s Islamic banking assets now make up 15.4 per cent of total banking sector assets as of the end of March 2022, the central bank data showed.

GCC marktes

The GCC financial markets recorded net foreign inflows of US$3.11bn in April 2022 with year-to-date net inflows reaching at US$16.32bn. Countries with positive foreign inflows in April were led by Saudi Arabia followed by Qatar, Abu Dhabi and Kuwait, respectively. Overall, on year-to-date basis, Saudi Arabia led with net foreign inflows of US$8.81bn followed by US$3.07bn by Qatar and US$2.84bn by Abu Dhabi.

Bahrain's Finance and National Economy Minister Shaikh Salman bin Khalifa al Khalifa said that the monetary policy adopted by the Central Bank of Bahrain (CBB) seeks to stabilise the exchange rate of the Bahraini dinar against the US dollar. This policy has been followed for a long time in order to maintain the stability and steadiness of foreign financial transactions, smoothly and transparently, in a manner that enhances trust in the banking system and transactions in Bahraini dinar in the local market, he pointed out. In response to a question regarding monetary and financial policies to curb inflation, the minister said this policy has proven successful over the past decades to reduce risks of exchange rate fluctuations and their negative repercussions on the local economy.

Saudi Arabia posted the highest quarterly surplus in the first quarter of 2022 budget with SR57.49bn in over six years. This is equivalent to 63.82 per cent of the total estimated SR90.09bn surplus of the 2022 budget, according to a report by the Ministry of Finance. The ministry announced on last Sunday that the actual revenues of the first quarter amounted to about SR277.96bn, a rise of 36 per cent year-on-year, while actual expenditures grew by 4 per cent to SR220.47bn in the first quarter of the year.

The ministry disclosed that the total oil revenues amounted to SR183.7bn, an increase of 58 per cent while compared to the same quarter of last year, while non-oil revenues rose SR94.26bn, an increase of seven per cent. Oil revenues accounted for 66.09 per cent of the total revenues, while non-oil revenues amounted to about 33.91 per cent.

Business conditions in Dubai’s non-oil private sector economy maintained a strong pace of improvement in the first month after the Expo 2020 ended, led by a sharp increase in output levels, a survey showed last week. The seasonally adjusted S&P Global Dubai Purchasing Managers' Index (PMI) was registered at 54.7 in April, down from 55.5 in March, its first drop since January.

The indicator stayed above the 50 no-change mark for the 17th consecutive month. The output index remained strong in April, and despite a slight softening from the previous month, the rate of growth was the second-quickest seen since July 2019.

This was due to a sharp rise in customer sales as the economy recovered further from COVID-19 measures, the survey report said.

Global news

Heavy falls in European and Asian stock markets followed the Wall Street's worst day since mid-2020 on Thursday, as stark warnings from some of the world's biggest retailers underscored just how hard inflation is biting. Bond markets rallied in the dive for safety and on bets that interest rate rises may get recalibrated, but it was the gloom striking down equities after Wednesday's US$25bn wipe out in US retailer Target's shares that dominated the action.

The focus remained on what central banks will now do as they walk the tightrope of trying to regain control of inflation, which is now at 40-year highs in some countries, without causing painful recessions. Inflation worriers watched oil prices ease again too, as fears over slower economic growth outweighed lingering fears over tight global supplies. Brent crude went from US$110.41 to US$108.25 per barrel in London trading, while US crude dipped to US$108.78 a barrel and gold , which has fallen more than 12 per cent since March, clawed up to US$1,822 levels per ounce.

Recommendations

Globally, the markets fell again as global sell-off continued during last week. The S&P 500 index is down more than 17 per cent in the first 95 trading days of 2022.

Investors are on high alert mode as they are watching inflation numbers and shifting to bond market.

Regionally, all the GCC markets ended the week lower due to higher inflation and high volatility.