Muscat Securities Market Muscat Securities Market

4,503.49 -44.25 -0.97 %

MSM30 down on institutional sales

(12/2/2018 8:09:00 AM)

MSM witnessed some institutional pressure as well as the entry of speculators on several leading stocks, in addition to corporate disclosures. Generally, trading values remained within their usual average and no unusual movement was recorded, except in the trading of the rights issues of Bank Dhofar. MSM30 closed the week down by 0.93 per cent at 4,412.06. All sub-indices closed down led by the Services Index (-1.35 per cent) followed by the Industrial Index (-1.02 per cent) and then the Financial Index (-0.86 per cent). The MSM Shariah Index also closed down by 0.65 per cent w-o-w.

Bank Sohar said that in its meeting held on November 19, the Board of Directors decided to raise its capital by issuing perpetual capital securities by RO 70 million with an additional RO 30 million in green show option, subject to necessary approvals, followed by the RO 40 million of rights issue within 2019. The bank had earlier announced an RO 40 million rights issue in January 2018, which did not materialise. We believe that Tier 1 capital will get a significant boost (18 per cent to 26 per cent) with the successful raising of RO 70 million to 100 million.

Bank Dhofar extended its Rights Issue and subscription period (after it got the required approvals) due to the National Holiday within the original time frame. Thus, the current Rights issue will be end on December 4 and the subscription period on December 9.

Majan College, a listed stock in MSM, disclosed key points of the EGM and AGM include approving the capital increase from RO 6 million to RO 15 million, cash dividend of 30 per cent and bonus share of 200 per cent i.e. two share per share.

Locally, last week, the Central Bank of Oman (CBO) announced a new issue of government development bond (issue 59) which is the fourth this year. The size is RO 100 million with a maturity period of five years and will carry a coupon rate of 5 per cent per annum. As per the CBO, the issue will be open for subscription from December 4, 2018, while the auction will be held on Sunday, December 16. The issue settlement date will be on December 18 and the maturity date on December 18, 2023. Available data showed that latest government development bonds with maturity of five years (issue 57) carried a coupon rate of 4.75 per cent and an average accepted yield of 4.85 per cent.

CBO’s foreign assets reached RO 5.38 billion at the end of Sept’18, down by 18 per centYoY and 4 per cent MoM, falling below the TTM simple average of RO 6.31 billion. These assets include bullion, IMF reserve assets, placements abroad and foreign securities.

Latest CBO data indicates that the weighted average interest rate spread (lending rate minus deposit rate) on Omani Rial softened by 0.9bps on month-to-month (MoM) basis, at 3.508 per cent for the month of Sept’18, as weighted average deposit rate growth outpaced lending rate growth. (RO spread is 1bps lower than Sept’17 level). Weighted average FCY spread rose by 4.7bps in Sept’18 (at 3.712 per cent) over the previous month. The spread is higher by 87.4bps when compared to Sept’17 rate, and has been steadily rising over time. Weighted average interest rate on private sector RO time deposits increased by 2.4bpsMoM and declined by 3.5bps YoY, to 3.555 per cent, which is almost the average of 3.55 per cent over Jan-Aug’18. Weighted average interest rate on ALL private sector deposits (RO), however, increased to 1.330 per cent (+1.3bps MoM and +3.5bps YoY) in Sept’18 when compared to an average of 1.28 per cent over Jan-Aug’18.

Foreign trade data indicates trade surplus of RO 3.5 billion during 7M’18, up by 116 per cent YoY (7M’17; RO 1.6bn). The healthy surplus came on the back of strong merchandise exports growth as it increased by 32 per cent YoY compared with recorded merchandise imports growth of 7 per cent during the same period. All export segments include Oil and Gas, Non-Oil and Re Exports were up by 38.5 per cent, 30.3 per cent and 5.8 per cent respectively with total additions of RO 2.25 billion.

Oil & Gas forms 63 per cent of the total Merchandise Exports in 7M’18 followed by Non Oil (26 per cent) and then Re Exports (11 per cent). Saudi Stock Exchange topped the gainers within GCC region closing up by 0.7 per cent while Abu Dhabi Securities Exchange was the biggest loser closing down by 4.31 per cent. Saudi CMA latest monthly bulletin showed that total assets of investment funds (number of operating funds 264) as of 3Q’18 stood at SAR 117.85bn, up by 4.6 per cent YoY. Domestic assets form 87.4 per cent of the total assets.

Globally, the key event was the formal approval by the European Union ( 27 countries) regarding EU-UK Brexit deal as well as the agreement on a road map that would include the relationship with the United Kingdom in the post-exit period. The resolution will enter into force on March 29, 2019. In 2017, UK exports to the EU were £274 billion (44.5 per cent of all UK exports).

The Federal Reserve Chairman said last week he considers the central bank’s benchmark interest rate to be near a neutral level, an important distinction from remarks he made less than two months. Earlier, he said that interests rates are far from nutural level, the statement which created pressures on the markets. When interest rates are near a neutral level, means neither speeding up nor slowing down growth. Currently, FED rates are in a target range of 2.0 per cent to 2.25 per cent.

Oman Daily Observer