Investment Stabilisation Fund declines in Q2

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MUSCAT -- The Investment Stabilisation Fund (ISF), set up last year as a joint public-private sector initiative to help bolster the stock market, declined marginally by 0.8 per cent to reach a Net Asset Value (NAV) of RO 1.178 per unit during the second quarter ended June 30, 2010.

Despite the decline, the NAV of the fund still significantly outperformed the MSM30 index, while also contributing to the stability of the stock market, stated Salah bin Hilal al Mawali, ViceChairman of the Investors Committee, in a report on the ISF's first half performance. As of June 30, 2010, the fund held a total of 110.920 million units with a Net Asset Value of RO 130.638 million.

In comparison, the MSM-30 index declined 4.8 per cent during the first half of 2010, with an 8.5 per cent decline in the Industry Index, followed by an 8.8 per cent drop in the Banking and Investment Index, and a 13.6 per cent fall in the Service sector index.

This decline however corresponds to the drop seen in international markets during the recent economic crisis in Greece and other European countries.

The daily average traded value during this period was around RO 5 million, while GCC markets also witnessed declines in the range of 5-20 per cent, Al Mawali noted.

The vice chairman was positive in his assessment of the country's economic outlook, citing in particular the stability of oil prices and continuing government economic initiatives.

"There has been an overall improvement in sentiment within the corporate sector and first half results indicate a growth in profits. Consequently, we expect better market performance in the medium to long term as these conditions continue," Al Mawali stated.

The Investment Stabilisation Fund was set up as an open-ended fund with a capital is RO 150 million, made up of a 60 per cent (RO 90 million) contribution from the government, with the rest (RO 60 million) distributed among pension funds and the private sector represented by banks, investment companies and companies operating in securities.

The investment objectives of the fund are aimed at assisting in stabilising the prices of equities listed on the MSM, boosting investor confidence and liquidity in the MSM, investing in listed companies with strong fundamentals, and achieving capital growth for unit-holders over the long-term.

By Staff Reporter

© Oman Daily Observer 2010