Favourable outlook

Lacklustre market volumes as seen in the month under review may soon be a thing of the past as both domestic and international investors turn their eyes on the GCC markets

The MSM30 Index continued to outperform regional markets, increasing by 5.39 per cent, on the back of a good show by the industrial and services sectors for the period between May 16 to June 15. Three primary issues (Voltamp IPO, Bank Sohar call money and United Finance’s rights issue) of approximately RO70 million reflected the lacklustre market volumes in May. Average daily turnover for the period was down 2.5 per cent to RO21.5 million. Oman Flour mill (+37.2 per cent) was the top performer in the index.

The banking index proved to be a drag, performing poorly after the CBO announced key changes in the banking regulations in a bid to rein in inflation. The CBO has pushed through an agenda of restricting growth in money supply, by increasing the Cash Reserve Ration (CRR) to 8 per cent from the current 5 per cent and revising the lending ratio to 82.5 per cent.

Voltamp IPO received an overwhelming response, being oversubscribed 23.3 times. The stock was listed on the MSM on June 17.

In corporate events, ONIC Holding announced a 25 per cent strategic investment in Sama Holding Company (SHC) for approximately RO13.5 million. SHC is into aircraft leasing, with approximately two years of business history. In other major events, Muscat Finance’s merger proposal with National Finance failed to materialise as the proposal did not receive the requisite mandate. Also, Ominvest, the major shareholder in Muscat Finance, sold 17.2 million shares for RO6.9 million (RO0.398 per share).

In a major announcement, the Oman Chamber of Commerce raised cement prices in the Sultanate by RO4 per tonne and RO0.200 per bag, a move seen having a positive impact on the two cement companies in the Sultanate – Oman Cement and Raysut Cement.
                       

Amid rising crude oil prices, the performance of stock exchanges in the GCC was mixed, with most of them ending in the positive territory for the period. Doha exchange was the best performing, with its index registering 4.2 per cent gains while Saudi index had a lacklustre month. Kuwait was the second best performing market with the real estate sector there taking the lead while the Bahrain Stock Exchange was driven mainly by banking sector gains. The Saudi and Dubai indices occupied the losers list during the month, shedding 1 per cent and 0.4 per cent, respectively. The investment sector stocks led the decline followed by the banking sector. GCC exchanges also witnessed a rush of companies seeking listing, with more than a dozen companies having filed their prospectus in the last two months. Increasing liquidity and risk appetite among local investors coupled with increased foreign investment indicates to a favourable outlook in the coming days.

Data and analysis by Vision Securities Co. LLC (Vision). While utmost care has been taken in preparing the above report, neither Vision nor Oman Economic Review makes any guarantee, representation or warranty, whether express or implied, and accepts no responsibility or liability as to its accuracy or completeness of the data being provided.

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