Muscat Securities Market Muscat Securities Market

4,503.49 -44.25 -0.97 %

MSM30: Recovery and block deals

(6/3/2018 11:01:00 AM)

The previous week saw better performance of the market on several factors including attractive opportunities being offered by some lead stocks, positive reports on number of listed stocks and encouraging macroeconomic data. Moreover, some block deals were executed and we have seen continuing pressures from foreign institution investments and other pressures on stocks that represent companies which were impacted by the recent cyclone. The MSM30 closed up by 0.93 per cent at 4,606.68. Sub-indices closed up led by the Industrial Index (+1.18 per cent) then the Services Index (+0.36 per cent) and the Financial Index (+0.33 per cent). The MSM Shariah Index also closed up by 0.41 per cent.

National Gas Company SAOG, the Company, disclosed that it has entered into a Memorandum of Understanding (MoU) with Krishnapatnam Port Company Limited (KPCL) in the state of Andhra Pradesh in India to engage in further discussions for setting up an LPG import and storage terminal. The Company added that post the MoU signing and consequent to the fruitful outcome of the detailed discussions, the Company would be incorporating the required legal entity in India to enter into the requisite agreements for this project.

In the weekly technical analysis, technical analysis indicators indicate that the MSM index will reach 4,500 points in the coming period. Technically for the market index using moving averages, we find that the index still below the level of the inter averages market (50,100 and 200 days). Oman last week witnessed cyclone Mekunu hitting its coast in Dhofar/Al Wusta Governorates. The cyclone ravaged the city but thanks to pre-planning from the government, the impact was minimised. MSM issued a notice whereby they announced that the companies who are affected by the cyclone should announce the impact of it on their financials. Although many companies put out the disclosures but only few of them were quantifiable, such as: • Vision Insurance: Claims not expected to exceed RO 100,000.

• Raysut Cement: Production stopped for about one week.

• Salalah Mills: Shutdown of production lines for a week and partial reopening thereafter.

• Salalah Port: Operation remained closed for a week.

• Banks: On average delaying the loan repayment for 2 months for their Dhofar and Al Wusta customers.

Other companies have put out disclosures, however, those cannot be quantified while some are still evaluating it and would charge insurance companies for it. We believe, overall insurance companies will be most affected specially the ones who have higher premiums originating from Dhofar.

The Executive President of the CMA said that enforcing mandatory medical health insurance for workers in the private sector will soon be enacted. He added that the preparation of the preliminary draft of the unified document for mandatory health insurance for private sector workers is complete and an actuarial study related to the health insurance services prices was assigned to a specialised international office.

This was done in order to evaluate the size of the risks in the health insurance law, pricing of services, methods of financing and the rates of contributions according to internationally approved scientific bases. We believe that the introduction of this insurance will positively affect the insurance companies operating in this field, especially lead listed companies in terms of market share in the health insurance sector such as the National Life and General Insurance Company, Oman United Insurance Co and Al Madina Takaful Co.

Central Bank of Oman reported data of OmanNet. The data which can be assumed as a measure to gauge consumer spending as it takes into account most of the point of sale and ATM related transactions, indicates that the consumer spending in Oman rose by 13 per cent to RO 3.32bn in 2017 compared to RO 2.93bn in 2016.

Overall volume of the transaction also rose during the period by 31 per cent YoY to 59.2m compared to 45.1m in 2016. However, size of average transaction dropped to RO 56 compared to RO 65 previously. We believe such numbers should give investors’ confidence about the state of the economy. Saudi Stock Exchange topped the gainers within the GCC region as it closed up by 1.71 per cent on weekly basis while Qatar Exchange was the only loser closing down by 1.86 per cent.

Dubai Airport Free Zone Authority (DAFZA) last week revealed one of its initiatives related to 26 Dubai 10X initiatives from 24 government entities in Dubai approved by Shaikh Hamdan bin Mohammed. DAFZA launched Free Zone Exchange (FZExchange) which will be the world’s first stock exchange dedicated to trading shares of free zone businesses. The FZExchange will contribute to opening new fields of investment. It will enable foreign investors to tap capital in the region, without the need to return to their country of origin.

Oman Daily Observer