MSM ends in red despite upbeat trading activity

Energetic trading activities were recorded by the MSM during the past week due to several deals on selected shares, as well as the activities related to the month-end, in addition to the active participation of local and foreign institutional investors. However, the MSM30 closed the week down by 0.69 per cent on weekly basis. Similarly, all sub-indices ended on a negative note led by the Service Index (-1.81 per cent) followed by the Industrial Index (0.66 per cent) then the financial Index (slightly closed down by 0.01 per cent on weekly basis). The MSM Shariah Index closed down by 0.4 per cent w-o-w.

The Financial Services Co said that it received a letter from Gulf Baader Capital Markets SAOC turning down the proposal made by the Financial Services regarding the possibility of creating new entity through a partnership.

In the weekly technical analysis, we will continue our last week recommendation on MSM30 index. The market index will move between the first support level at 4,400 points and the first resistance at 4,500 points. As MSM30 index approached last week to touch the level of our support by 20 points, which push the index to cross this level during this week. Currently MSM 30 index is below the 50-day moving average. The index will move towards 4,370 points if MSM30 index closed below 4,400 points.

Financial details of the listed oil marketing companies have showed an annual increase of 18.5 per cent in 9M’18 in revenues at RO 1.23 billion mainly supported by the Retail Business and the Aviation Business. Higher retail fuel prices, promotional campaigns and increased filling stations have helped the Retail Business while the Aviation Business got support from the opening of the New Muscat International Airport which resulted in increased flights movements and hence higher fuel demand from airlines. The sector operating profit grew by only 1.3 per cent YOY as the performance was under pressure because of Shell Oman Marketing Co SAOG which attributed this to the revised margin structure for the new supply point at Al-jifnain. On the other hand, total net earnings were slightly down by 0.2 per cent at RO 21.64 million as Shell Oman Marketing Co incurred decline in its net profit. Nevertheless, both Oman Oil Marketing Co and Al Maha Petroleum Products Marketing Co posted healthy growth of 17.1 per cent and 15.2 per cent respectively during 9M’18.

For the first time since May’17, the foreign institutional investments were net buyers with RO 0.4 million despite the geopolitical sentiments in the region. The month also saw a strong presence of the local institutional investments with a net buy of RO 3.7 million.

The Authority for Electricity Regulation proposed to amend the licence of ten energy companies in order to improve the competition between power plants/ power and desalination plants through the commitment of the licensees to the rules of the spot market and the relevant regulatory obligations. Total net earnings of the Energy sector were good for 9M’18, as it stood at around RO 76 million, up by 39.7 per cent YOY which was mainly due to lack of deferred tax expense impact.

Within the same contest, the Petroleum Development Oman (PDO) announced it has awarded a contract to build a landmark 100MW solar photovoltaic independent power producer (IPP) project to a joint Japanese-omani consortium. It will also be the world’s first utility-scale solar project to have an oil and gas company as the sole wholesale buyer of electricity.

Oman’s electricity net production for 8M’18 stood at 25,549.3 (GW/H) up by 3.3 per cent YOY. However, the consumption CAGR for 2013-17 came at 6.6 per cent versus a CAGR of 6.2 per cent for production, the statistics showed.

The Dubai Financial Market led the gainers within GCC region posting weekly gains of 2.51 per cent while Muscat Securities Market was the biggest loser closing down by 0.69 per cent.

The UAE issued a new law regarding the Central Bank and the regulation of financial facilities and activities. However, the law does not apply to the financial free zones and the financial institutions regulated by the authorities of those zones. Key points in the new law include 1) raising the Central Bank’s capital to AED 20bn, 2) establishing of a general reserve of up to four times paid-up capital, 3) ensuring prudent management of foreign reserves, 4) determining clear rules governing the financial infrastructure of the UAE, 5) setting specific provisions for customers’ protection and 6) setting up comprehensive rules governing the confidentiality, protection, and appropriate use of customer banking and credit information. According to the law makers, it shall help in protecting financial system, management of reserves and stability of national currency

Within the GCC, an analysis of banks for 9M’18 earnings indicates that the Kuwaiti banks posted the highest increase in their net profit at 19.3 per cent YOY, followed by Omani banks at 13.0 per cent, Bahraini banks at 11.6 per cent YOY, UAE banks at 10.0 per cent, Saudi at 9.9 per cent YOY and Qatari banks at 8.1 per cent YOY. The total GCC banking sector posted a total net profit of $26.7 billion in 9M’18, up by 10.5 per cent YOY. On quarterly basis, total GCC banking sector net profit touched $8.45 billion in Q3’18 (+2.0 per cent QOQ; +11.0 per cent YOY). Saudi banks contributed 37.6 per cent to the total net profit, followed by UAE at 30.2 per cent, Qatar at 17.6 per cent, Kuwait at 8.7 per cent, Bahrain at 3.0 per cent and Oman at 2.8 per cent.

[Courtesy: U-capital]