Lacklustre trading while investors await further company disclosures
The MSM saw weak trading activity after the end of the results season (other than Omantel), as investors moved to other markets which have recently seen acceleration in result announcements. As investors await further disclosures, calm investments activities prevailed in the stock market during the previous week. The MSM30 ended the week down by 0.78 per cent at 4722.46.
All sub-indices closed down led by the Industrial Index (-1.12 per cent) followed by the Services Index (-0.73 per cent) then the Financial Index (-0.64 per cent). The Shariah Index closed down by 1.19 per cent.
Omantel published a correction about its earlier bond issuance disclosures stating that the longer $900m 2028 bond (not in 2023) is paying an annual coupon of 6.625 per cent (not 5.625 per cent) and the shorter $600m 2023 bond (not in 2028) is paying an annual coupon of 5.625 per cent (not 6.625 per cent).
In the weekly technical analysis, as we mentioned in our previous report, that if MSM index close above the level of 4,730 points (a strong support level) is very important as a break of this level will press the index to reach 4,680 points.
Foreign institutional investments were net buyers in the last couple of weeks registering a total net buy of RO 1.09m, as they benefit from attractive multiples and yields offered by selected shares, a matter we kept hinting about it.
IMF issued its article IV report on Oman last week. IMF estimates Oman’s real and nominal GDP in 2018 to grow by 2.08 per cent and 11.24 per cent. Lower real GDP growth in 2018 is estimated because of the continuation of Opec led output cut while higher nominal GDP growth is estimated because of expectation of higher oil prices. IMF said that government’s diversification efforts and the planned completion of major infrastructure projects are expected to gradually raise nonhydrocarbon growth to about 4 per cent over the medium-term. The government has made progress in curtailing both current and capital expenditure, helping reduce the breakeven fiscal oil price and the government is undertaking further reforms to raise non-hydrocarbon revenue, such as introducing value-added and excise taxes, and intends to continue with spending restraint. This would bring the deficit to below 4 per cent of GDP in the next two years. IMF was of the view that the government’s external assets in the State General Reserve Fund, Oman’s sovereign wealth fund, provide significant additional external buffers and the exchange rate peg to the US dollar is appropriate considering the current structure of the economy.
Recent data published by the National Centre for Statistics and Information about Oman GDP at market prices showed that it went up by 8 per cent in 2017 on yearly basis on the back of strong improvement of petroleum activities which got support by better average Oman oil prices (+27.9 per cent YOY at USD 51.3/BBL). Petroleum activities contribution to GDP at market prices went up from 27.1 per cent in 2016 to 30.3 per cent in 2017. The growth in Services Activities also supported the GDP as they went up by 3.3 per cent to RO 14.3bn.
Among the GCC financial markets, Kuwait Stock Exchange was the only gainer closing the week up by 0.23 per cent while Bahrain Bourse was the worst ending down by 2.94 per cent.
Saudi Arabia’s insurance sector is going through a consolidation phase. Amongst thirty-three listed insurance players, at least six have recently decided to go through M&A route. Within the crowded out insurance sector, the need for consolidation arose when many smaller firms suffered 50 per cent erosion of their capital in last couple of years and found it hard to find their niche. Recently, Boards of Walaa Insurance Cooperative Company and Al Sagr Cooperative Insurance Co have approved studying the economic feasibility of a merger. Over the next six months, the two firms will sign a non-binding memorandum of understanding to conduct the technical, financial and legal studies necessary for the merger process. Last month, Malath Cooperative Insurance Co and Allied Cooperative Insurance Group (ACIG) extended their initial agreement to study the feasibility of a potential merger for six months. Other insurers that have eyed consolidation include Gulf Union Cooperative Insurance and Al Ahlia for Cooperative Insurance, which started talks last year for a potential merger.
Further in Saudi, the chief executive of the National Centre for Privatization & PPP (NCP), said that Saudi Arabia’s privatization programme target various services across the ten sectors defined by the newly-released government document. The first phase of the scheme targets the medical centre of Saudi Arabian Airlines (Saudia) and four grain silos through asset sell-offs. The privatization initiatives will also include Saudi Premier League clubs as well as the production sector of Saline Water Conversion Corporation and the international airports company. The remaining sectors will be privatised under publicprivate partnerships. Riyadh plans to sell five state assets and initiate 14 PPP investments worth between SAR 24 billion and SAR 28 billion, according to a government document reported by newspapers.
In Kuwait, the country agreed to ratify the amended protocol to the Marrakech Agreement regarding establishing the World Trade Organization. This step will facilitate the movement of goods across borders and customs cooperation and give national and international trade more freedom as well as simplify and reduce the procedures and requirements required by government bodies related to the movement of import and export. (Courtesy: U-capital)