MSX index inches up amid earnings season
The benchmark MSX30 index of the Muscat Stock Exchange ended the week marginally up by 0.03 per cent. Industrial and Services indices ended in green up by 2.04 per cent and 1.03 per cent, respectively, while the Financial index closed up by 1.19 per cent. However, MSX Shariah index was lower by a per cent.
MSX corporate profitability in the first quarter of 2021 was up 87 per cent on quarter-onquarter basis and 34 per cent on year-on-year. The data corresponds to 99 companies whose year ends in December excluding Omantel, Sweets of Oman and Gulf Investment Services.
Financial sector leads with year-on-year and sequential profitability growth of 33.4 per cent and 52 per cent, respectively. Industrial sector profitability was slightly lower on sequential basis but better on year-on-year basis as the sector reported loss last year in the first quarter. Services sector reported profit in the first quarter of 2021 compared to loss in the fourth quarter of last year. However, the profitability was down 54 per cent year-on-year.
Local news
port of Duqm. The agreement represents the strong effort of the two companies to offer a cost-effective proposition to their customers both for the storage of liquid products and marine fuel delivery in the port, as well as the contribution to the competitiveness of Duqm as a regional port. OOMCO, in which OQ has a 49 per cent shareholding, is currently precommissioning a greenfield bunker terminal at the Port of Duqm. This full-fledged terminal will consist of 30,000 sqm storage capacity and is capable of storing and handling both heavy fuel oils as well as lighter distillate products such as marine gas oil.. Eighteen Omani public and private sector organisations have come together to join hands with the sultanate’s authorities in promoting and marketing frankincense products to the global market. An agreement to this effect was signed by the Commissioner-General of the Sultanate of Oman at Expo 2020 in Dubai, together with the Authority for SME Development (Riyada), Oman Chamber of Commerce and Industry and the Oman Trading Platform (Taiseer). The project will be spearheaded by the Taiseer platform with the support of the CommissionerGeneral, Oman Investment Authority, and other stakeholder agencies of the Omani government. The goal is to prep a range of frankincense based
Omani products to be showcased as the Expo 2020 in Dubai. The board of directors of the Capital Market Authority (CMA) held its first meeting of 2021 under the chairmanship of H E Sultan Salim al Habsi, Minister of Finance and board chairman of the CMA.
Regional markets
The International Monetary Fund (IMF) has upgraded its outlook for the real gross domestic product (GDP) growth in the MENA region to 4 per cent in 2021, compared to its October projection of 3.2 per cent. The real GDP growth of the GCC countries is forecast to stand at 2.7 per cent in 2021 and 3.8 per cent in 2022, according to the IMF’s report ‘Regional Economic Outlook for the Middle East and Central Asia’ released in April 2021.
As per the IMF, the activities in oil-exporting countries are expected to recover in 2021, supported by the projected upturn in the second half of 2021. The non-oil GDP of oil-exporting countries is forecast to increase by 3.3 per cent in 2021, driven by higher oil prices and early vaccine rollouts. Meanwhile, the oil GDP would grow by 5.8 per cent in 2021 amid the surge in Libya’s oil production by more than 233 per cent following the reopening of oil fields and ports in late 2020. As for oil importers, their economies are forecast to register a growth rate at 2.3 per cent in 2021, a downgrade of 0.4 per cent compared to the IMF’s October 2020 outlook.
The UAE’s central bank has extended the economic support scheme until mid-2022. Financial institutions will continue to be eligible to access the collateralised AED50bn zero-cost liquidity facility up to June 30 to provide new loans and financing to individuals, small and medium-sized enterprises, and other private corporates affected by the pandemic, according to a statement. Financing for loan deferrals under the Targeted Economic Support Scheme will also be extended until the end of 2021.
The outstanding financing for TESS deferrals shall be fully phased out by December 31. Central bank expects financial institutions to prioritise lending through the TESS to the most negatively affected sectors, businesses, and households.
In the latest report on Kuwait by Moody’s, it warned that the liquidity risks threaten the credit rating in the short term. The agency explained that Kuwait’s classification is restricted by the cracking of the relationship between the government and the National Assembly. It impedes the policy-making process and undermines the state’s ability to adapt to economic and financial turbulence. Despite the wealth, Kuwait’s economy is smaller than other oil-exporting Gulf economies.
Global news
Chinese economy advanced 18.3 per cent year-on-year in the March quarter 2021, accelerating sharply from a 6.5 per cent growth in the fourth quarter and compared with market consensus of 19 per cent. This was the strongest pace of expansion since 1990, boosted by strengthening domestic and global demand, strict virus containment measures, and continued fiscal and monetary support. The latest reading reflected a low comparison base in 2020 when activity plunged due to the COVID-19 shocks. For 2021, China expects the economy to grow by more than 6 per cent. However, the services sector and smaller firms still faced challenges, while consumer inflation was likely to remain moderate, National Bureau of Statistics spokeswoman Liu Aihua said. In 2020, the country’s GDP expanded 2.3 per cent, the slowest pace in more than four decades.
Recommendation
Globally, earnings season is in full swing. So far the earnings are beating the analysts’ expectation which is now supporting the market peak levels.
Oil on the other hand witnessed some pressure during the week largely because of possible resumption of production flows from Iran over the recent talks between US and Iran.
Regionally, the results season has started with banks. So far most of the banks have put on decent numbers with growth at both quarter-on-quarter and year-on-year level. In this week we will see more large cap names in banking, petrochemical and telecom sector to announce earnings.
Locally in the MSX, we are witnessing a rotation in new names with higher retail participation. Market volumes and turnover have also improved considerably compared to last year. We continue to see good investor interest in Oman’s industrial sector, which is the best performing sub-index in the GCC region.
OQ-owned Oman Tank Terminal Company (OTTCO) and Oman Oil Marketing Company (OOMCO) signed an agreement regarding the operations and maintenance for OOMCO’s bunker terminal facility in the