MSM wit­nesses its best weekly per­for­mance in over 2.5 years

Muscat Daily - - BUSINESS -

The bench­mark in­dex of the Mus­cat Se­cu­ri­ties Mar­ket (MSM) last week posted its best per­for­mance since late March 2016 due to in­creased lo­cal in­sti­tu­tional sup­port to the mar­ket and strate­gic moves of the fund man­agers ahead of year-end.

The MSM30 in­dex closed the week up by 3.1 per cent at 4,548.72 points. All sub-in­dices closed higher on weekly ba­sis led by Fi­nan­cial in­dex (2.81 per cent up) fol­lowed by In­dus­trial in­dex (1.49 per cent up) and Ser­vices in­dex (1.17 per cent up). The MSM Shariah in­dex also closed up by 2.57 per cent.

The MSM30 in­dex’s per­for­mance dur­ing Novem­ber was mod­er­ate and vic­tim to ex­ter­nal fac­tors, de­spite rel­a­tively good re­sults posted by the listed com­pa­nies. The gen­eral in­dex closed down by 0.25 per cent month-on-month with av­er­age daily turnover and vol­ume of RO1.88mn and 15.8mn shares, no­table down on yearly ba­sis.

For­eign in­sti­tu­tional in­vest­ments reg­is­tered a net buy of RO2.16mn in Novem­ber, which is the sec­ond month in raw to see the en­try of those in­vest­ments. How­ever, for the first 11 months of 2018, for­eign in­vest­ments were net sellers with RO113.8mn due to spe­cial deals.

Lo­cal news

Gal­far En­gi­neer­ing & Con­tract­ing Com­pany said it has en­tered into a con­tract worth RO5.37mn re­lated to some work at Duqm from Saipem SPA, Oman. The par­ent com­pany’s or­der book at the end of Septem­ber 2018 stood at RO456mn. The group’s net profit for the first nine months of 2018 was RO2.24mn com­pared with a net loss of RO3.76mn dur­ing the same pe­riod last year.

Ray­sut Ce­ment dis­closed on the MSM that it has been awarded a con­tract re­lated to in­stal­la­tion of waste heat re­cov­ery sys­tem that will use the cur­rently wasted heat to gen­er­ate 9MW of power. The project is ex­pected to take at least 18 months to be com­pleted. As per var­i­ous me­dia sources, the com­pany ex­pects to save up to 30 per cent of its power cost upon com­ple­tion of this project.

Fur­ther­more, Ray­sut Ce­ment dis­closed on the MSM web­site about the news cir­cu­lated in sev­eral lo­cal and in­ter­na­tional me­dia re­gard­ing the ex­pan­sion plans of the com­pany. The com­pany dis­closed that such plans are at a pre­ma­ture stage pend­ing board ap­proval. Dur­ing the week, many news sources have in­di­cated that Ray­sut Ce­ment is in the process of in­vest­ing hun­dreds of mil­lions of dol­lars in ac­qui­si­tions in In­dia and Africa.

As per the lat­est Na­tional Cen­ter for Statis­tics and In­for­ma­tion (NCSI) monthly bul­letin, the lo­cal pro­duc­tion and import of nat­u­ral gas reached 34.2bn cu­bic me­tres in the first nine months 2018, a yearly in­crease of 11.6 per cent. The us­age rate was 100 per cent with the in­dus­trial projects stood at 58.6 per cent of the total con­sump­tion ver­sus fol­lowed by oil fields (21.9 per cent), then power gen­er­a­tions (18.9 per cent) and fi­nally the in­dus­tries area (0.5 per cent).

GCC mar­kets

Within the GCC fi­nan­cial mar­kets, the MSM topped the gain­ers in the re­gion fol­lowed by Qatar Exchange which gained 2.26 per cent on weekly ba­sis, while Dubai Fi­nan­cial Mar­ket was the big­gest loser clos­ing down by 3.31 per cent.

Within the GCC, an anal­y­sis of listed banks’ fi­nan­cials for the first nine months of 2018 earn­ings in­di­cates that Oman’s banks posted the high­est in­crease in net loans at 6.9 per cent year-on-year, fol­lowed by the UAE banks at 6.3 per cent, Kuwait banks at 3.4 per cent year-on-year, Qatari banks at three per cent, and Saudi and Bahrain banks at 0.4 per cent year-on-year. Total GCC bank­ing sec­tor grew its total net loans to US$1.31tn in the first nine months of 2018, up by 3.3 per cent year-on-year and 0.9 per cent quar­ter-on-quar­ter, lion’s share of which lies with the UAE (30.2 per cent) then Saudi Ara­bia (28.7 per cent).

Total GCC customer de­posits of listed banks stood at US$1.45tn at the end of the first nine months of 2018, up by one per cent quar­ter-on­quar­ter and 4.4 per cent yearon-year. Fastest year-on-year growth was seen in the UAE banks at 8.6 per cent year-onyear, fol­lowed by Qatari banks at 4.9 per cent year-on-year, and Omani banks at 3.6 per cent, Kuwait at 2.1 per cent and Saudi Ara­bia at 1.5 per cent and Bahrain at 1.1 per cent year-onyear. The en­tire bank­ing sec­tor’s loan-to-de­posit ra­tio stood at 90.7 per cent.

Global news

Glob­ally, data compiled by Bloomberg re­gard­ing LNG ves­sel track­ing showed that Aus­tralia over­took Qatar as top LNG seller in Novem­ber 2018 for the first time dur­ing a month. Aus­tralia ex­ported 6.623mn tons of LNG in Novem­ber 2018 com­pared to 6.318mn from Qatar. His­tor­i­cally, Aus­tralia LNG ex­ports form 22.5 per cent of total world ex­ports as per avail­able data com­pared to 26 per cent for Qatar.

Rec­om­men­da­tion

We are see­ing ac­tive movements in the mar­ket ahead of the year-end which re­flects port­fo­lios man­agers’ strate­gic ac­tions, as well as funds and in­sti­tu­tional in­vest­ments in or­der to sup­port the per­for­mance of their in­vest­ments for the cur­rent year. We ex­pect this trend to con­tinue dur­ing the com­ing pe­riod.

The com­pa­nies’ an­nounce­ments re­gard­ing ex­pan­sion­ary plans to ease pres­sures in their tra­di­tional mar­kets, have also at­tracted in­vestors to these com­pa­nies, es­pe­cially since they are rel­a­tively low lev­er­aged com­pa­nies thus able to ex­ploit their fi­nan­cial po­si­tion bet­ter.

With the ex­pected oil prices to be at ac­cept­able lev­els, the over­all eco­nomic sit­u­a­tion of the re­gion looks sta­ble. Oman en­joys healthy macroe­co­nomic fig­ures which in­di­cates the abil­ity to sus­tain vi­tal projects.

In­vestors are ad­vised to fo­cus on com­pa­nies that are able ei­ther to main­tain a good div­i­dends (tak­ing into ac­count their op­er­a­tional per­for­mance) or whose shares rep­re­sent an op­por­tu­nity of growth.

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