Market closes marginally higher

The Muscat Securities Market (MSM) closed marginally higher this week although it remained hostage to external geopolitical factors. Around two-thirds of trade was concentrated amongst blue chips. Companies offering good dividend yield were the ones that gained during the week.

MSM30 closed marginally higher during the week by 0.19 per cent on weekly basis. All sub-indices closed down except Services Index which closed up by 0.27 per cent. Industrial and Financial Index closed down by 0.75 per cent and 0.02 per cent respectively. The MSM Shariah Index closed down by 0.15 per cent w-o-w.

Oman sold $1.5 bn in Sukuk, or Islamic bonds, last week. The bond issue is Oman’s second public debt issuance this year, as the Sultanate borrows internationally to finance a budget deficit. It follows a $6.5 bn conventional bond issue in January, the country’s largest ever debt sale. The Sultanate started marketing the seven-year notes earlier last week with an initial price guidance of about 300 basis points over mid-swaps. The issue, which received orders in excess of $ 3.5 bn, was launched with a final spread of 280 basis points over mid-swaps i.e. 5.932 per cent. The bonds offer almost 50 basis points more than Oman’s existing $2 bn Sukuk issued last year and due in June 2024.

Oman Oil Company Exploration and Production (OOCEP) — the upstream subsidiary of Oman Oil Company (OOC) has agreed to sell a 10 per cent stake from the total value of Block 61 Khazzan, onshore Oman, to PC Oman Ventures Limited, a wholly owned subsidiary of Malaysian company Petroliam Nasional Berhad (Petronas). OOCEP, through its subsidiary Makarim Gas Development LLC, currently holds a 40 per cent stake in Block 61, whereas, the operator BP Oman holds the remaining. The completion of the transaction is subject to approval from the Sultanate of Oman’s government and other closing conditions. The sale of the 10 per cent stake will raise FDI to Oman and hand OOC decent money for future investments.

Oman National Engineering and Investment Company (ONEIC) announced last week that the administrative court has issued a verdict in the favour of ONEIC for a sum of RO 2.25 million. This claim was related to amounts unpaid by the Public Authority of Electricity and Water (PAEW) against maintenance work executed by ONEIC in various contract prior to 2017. The verdict is subject to appeal. The company also announced last week that it has been awarded contract by A’nama Poultry for construction of broiler houses and associated facilities for the sum of RO 7.12 million. The project is expected to be completed in May 2020.

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. Currently MSM30 index crossed up the 50-day moving average. The index trend will reach 4,500 points if the index closed above 4,470 points.

The Director General of MSM, said last week in a conference organised between FTSE Russel and MSM regarding regional challenges and some of the key issues facing investors next year, said that MSM is working with the FTSE group to get promoted to an emerging market while overcoming some of the aspects and challenges that hinder the market right now.

Locally, Oman public finance posted a deficit of RO 1.645 billion, down by 36.6 per cent for 7M’18 on better oil and gas revenue as per latest monthly bulletin published by National Centre for Statistics and Information. Total revenues went up by 25.3 per cent to RO 5.89 billion supported by higher earnings from most segments especially net oil revenue which formed 59.9 per cent of total revenues and went up by 37.5 per cent YOY (i.e. RO 962.1 million) on better oil price (stood and an average of ($65.4/BBL) compared with $51.6/BBL for the same period last year. Total expenditures went up by 9 per cent on yearly basis to RO 7.1 billion while actual expenditures under settlement dropped by 41.6 per cent. To finance the deficit, the government used means of financing covering net loans (84.8 per cent of total financing), net local loans (15.2 per cent of total financing) and there was no withdrawal from reserves. Till 7M’18, Interests paid on Loans were RO 345.2 million, up by 175.7 per cent YOY (i.e. RO 220 million) because of higher external debt.

Recent data about telecom subscribers revealed that total mobile subscribers stood at 6.64 million as of Sepetember 2018, down by 4.3 per cent compared to 2017 mainly on lower pre-paid mobile subscribers’ base (-5.6 per cent YTD). One of the key reasons behind this drop in pre-paid segment is due to the standardization of welcome pack offers by the operators based on the guidance from regulator, the telecom operators’ board of directors reports stated. On the other hand, the active mobile broadband subscribers saw a decline of 3 per cent during the same period at 4.22 million.

Tadawul led the gainers within GCC region posting weekly gains of 2.45 per cent while Abu Dhabi Stock Exchange was the biggest loser closing down by 2.13 per cent.

UAE Federal ministries have reported total revenues of AED 39 billion ($10.6 billion) during the first half of 2018, well ahead of budget, according to official figures. A financial performance report released by the UAE’S Ministry of Finance revealed that 2018 revenues in H1 represent 75.9 per cent of the total actual budget of AED51.4 billion. Expenditure amounted to AED33.2 billion in the first six months of the year, with the ministries recording 64.6 per cent of implementation, achieving a budget surplus of AED5.8 billion. (Courtesy: U-capital)