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IPOs, rights issues to boost market capitalisation: MSM

The upcoming initial public offerings (IPO) of three banks and rights and bond issues of other companies will help boost market capitalisation (m-cap) in the local bourse significantly this year, according to Muscat Securities Market (MSM).

On the back of improved sentiment, rights issues, dividend distribution and capital increases, MSM's m-cap has received a RO505mn boost this year. The total m-cap of MSM-listed securities stood at RO10.85bn as of April 19, 2012, as compared to RO10.34bn at the end of last year.

According to market experts, MSM's m-cap growth will be driven by IPOs and rights issues of commercial banks, which are looking to raise capital for new Islamic banking windows.

Speaking to Muscat Daily, Ahmed Saleh al Marhoon, director general of MSM, said that the local bourse's m-cap is closing in on RO11bn as a result of stock gains on the MSM index, stock dividends and rights issues by many listed firms.

Marhoon said, "We expect 2012 to be a good year and the market will witness significant growth in terms of m-cap. The new IPOs and rights issues will not only

add significant value to the market but also boost the m-cap of other listed companies. We are expecting significant improvements on the MSM index this year."

He added that apart from the three banking IPOs, Oman's capital market will also see a number of IPOs by closed stock and family-owned companies in the fourth quarter of this year and the first quarter of next year.

Marhoon said, "There are some closed stock and family businesses which have shown interest in public offerings. We will have a strategy in the coming months to encourage local companies to list on the bourse.

"We are also learning from the experience of the Istanbul Stock Exchange on the listing of family businesses."

Lo'ai Badie Bataineh, head of investment management group at Oman Arab Bank, expects MSM's m-cap to reach RO12bn by the end of this year.

He said, "MSM has been the smallest market in the GCC in terms of capitalisation. This year a lot of things are contributing to the growth of m-cap, including the listing of many fixed-income securities, rights issues and stock dividends. All things put together we expect MSM will overtake the Bahrain stock exchange in terms of m-cap soon, and this will attract more regional and global investors."

© Muscat Daily 2012

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