MSX index posts third straight weekly decline

The benchmark index of the Muscat Stock Exchange (MSX) posted a decline for the third consecutive week as investors await more corporate disclosures related to the 2022 financial performance and dividend announcements.

MSX30 Index of the Muscat Stock Exchange declined last week by 0.67 per cent and closed at 4,719 points. All sectoral indices recorded a raise except for the Financial Index which dropped 70.4 points. While Industrial Index recorded the highest increase at 75.8 points, Service Index increased by about 11.6 points, and MSX Sharia Index gained about five points.

Local news

▶oman LNG last week signed a long-term agreement with Turkey’s BOTAS Petroleum Pipeline Corporation to supply 1mn metric tonnes of liquefied natural gas (LNG) every year for ten years. As per the binding term-sheet agreement signed with BOTAS, Oman LNG will start supplying gas to Turkey in 2025. The agreement helps strengthen its partnerships with international firms in the energy and LNG industry, Oman LNG said in a press statement issued on Monday.

▶the Ministry of Finance and the Saudi Fund for Development signed MOU to finance the infrastructure construction project for the integrated economic zone in Al Dhahirah Governorate in Oman. The signing ceremony took place on the sidelines of the Omani-saudi Investment Forum in Riyadh. The first phase of the project will cost around Ro122mn. The project includes the construction of infrastructure, roads, electrical installations, water and sewage networks, treatment of industrial waste, and the setting up of basic facilities. The new economic zone will augment trade exchange between the two countries, attract Saudi companies to set up projects in Oman and consolidate economic partnerships. ▶oman's gross domestic product (GDP) at current prices grew by 30.4 per cent to reach Ro32bn until the end of September 2022, compared to the same period in 2021. This came in the first edition of the ‘Quarterly National Accounts Indicators’ report issued by the National Centre for Statistics and Information (NCSI). ▶omantel announced that as part of its deleveraging plan, it has prepaid its outstanding term loan of Ro130mn (Us$340mn) on January 25, 2023. The company's management said that this will have a positive impact on future interest costs.

▶the Muscat Stock Exchange has joined the 'Tabadul' platform, the region’s first digital exchange hub, established on the mutual market access model that provides a trading network between stock exchanges regionally. As a result, the MSX’S listed securities, along with those of Abu Dhabi Securities Exchange (ADX) and Bahrain Bourse (BHB), are now available for digital trading, further enhancing liquidity and facilitating trading mechanisms for investors. The announcement came during a bell ringing ceremony, organised by the Abu Dhabi Securities Exchange at its headquarters to officially welcome MSX to Tabadul. ▶total number of small and medium enterprises (SMES) in Oman which is funded by the Inma Fund in 2022 stood at 144 projects in various economic sectors, with a total value of Ro20mn. At the forefront of those sectors is industry (20 per cent), followed by services (19 per cent), transport and logistics (16 per cent), infrastructure (15 per cent), trade (10 per cent), tourism (9 per cent) and the oil and gas sector (8 per cent). The projects funded by Inma Fund in Oman’s various governorates managed to boost their production lines and provided a number of products and services to the local market. ▶the Central Bank of Oman (CBO) last week raised Ro70mn by way of allotting treasury bills. The value of the allotted tteasury bills for a maturity period of 91 days amounted to Ro5mn. Whereas, the value of the allotted treasury bills for a maturity period of 182 days amounted to Ro65mn.

GCC markets

Saudi Arabia's GDP grew by 5.4 per cent in the Q4 2022 compared with the same period in 2021, driven by both oil and non-oil sectors, according to government last week. Oil sector activity rose 6.1 per cent while non-oil sector activity grew 6.2 per cent, according to the General Authority for Statistics. Overall, the economy grew 8.7 per cent last year, the estimates showed.

The investments of banks operating in the UAE exceeded AED511BN at the end of November 2022, the highest level in 13 months, according to the latest statistics of the Central Bank of the UAE (CBUAE). The CBUAE'S statistics also showed an annual increase of 7.7 per cent, equivalent to AED36.6BN, reaching a total of AED511BN at the end of November, compared to AED474.5BN in November 2021. Banks’ investments rose in the first eleven months of 2022 by AED37.9BN or 8 per cent, compared to AED473.2BN at the end of December 2021.

The rapid credit growth has reduced the availability of liquidity in the Saudi banking sector, said S&P Global Ratings in a new report titled “Saudi Banking Sector 2023 Outlook”. “The government has large deposits with the Saudi Central Bank (SAMA) but is not deploying this liquidity to alleviate pressure on banks," said S&P Global Ratings credit analyst Roman Rybalkin. "Whether the government will step up its deposits with the banking system in 2023 is unclear. We expect banking sector credit growth will slow to 10-12 per cent in 2023-2024, owing to a high base effect, higher interest rates, and tighter liquidity.”

Kuwait's caretaker cabinet submitted a draft 2023-2024 budget last week projecting a growing deficit with bigger state spending and lower oil revenues. The budget deficit will swell to five billion dinars (more than Us$16bn) for the year starting in April, up from the Us$10.3bn predicted for the current fiscal year, the finance ministry said. Spending will rise by 11.7 per cent to more than Us$86bn, with 80 per cent going on civil service wages and public subsidies. Revenues – 88 per cent of which come from oil – are projected at around Us$63.8bn, a 16.9 per cent drop.

Global news

The German economy unexpectedly shrank in the fourth quarter a sign that Europe's largest economy may be entering a much-predicted recession, though likely a shallower one than originally feared. Gross domestic product decreased 0.2 per cent quarter on quarter in adjusted terms, the federal statistics office said. In the previous quarter, the German economy grew by an upwardly revised 0.5 per cent versus the previous three months.

The German government has said the economic situation should improve from spring onwards, and last week revised up its GDP forecast for 2023 – predicting growth of 0.2 per cent, up from an autumn forecast of a 0.4 per cent decline.

The International Monetary Fund raised its 2023 global growth outlook slightly due to "surprisingly resilient" demand in the United States and Europe, an easing of energy costs and the reopening of China's economy after Beijing abandoned its strict COVID-19 restrictions. The IMF said global growth would still fall to 2.9 per cent in 2023 from 3.4 per cent in 2022, but its latest World Economic Outlook forecasts mark an improvement over an October prediction of 2.7 per cent growth this year with warnings that the world could easily tip into recession. For 2024, the IMF said global growth would accelerate slightly to 3.1 per cent, but this is a tenth of a percentage point below the October forecast as the full impact of steeper bank interest rate hikes slows demand.