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Muscat Securities Market, 30 index hits all-time high

Muscat - Sustained buying witnessed across the board boosted the market sentiment further on the Muscat Securities Market (MSM) yesterday.

Bull run continued for the second consecutive day yesterday and select stocks recorded smart-to-handsome gains on all-round support from local, regional and foreign investors. Reflecting the trend, the MSM 30-share index hit an all-time high of 5,170.37 points, for the first time since its inception in 1989.

The index had recorded a historic high of 5,098.4 points on February 3, 1998. Now, bull operators continue to pour in money and drive the stock market, with the index gaining 156.4 points at 5,170.37 yesterday.

"Bear hammering will continue. The MSM 30 index soared more than 53 per cent since December 2004. The market continues to be in an up run, and small investors are entering the market from various parts of Oman, and are keen on buying fundamentally good, low-priced shares. Of course, investors look at shares of honestly and competently managed companies," a stockbroker said.

The domestic economy registered 14.4 per cent growth last year, and the first five months of the current year witnessed solid growth, and the year is expected to close on a positive note. "The corporate results for the year 2004 were promising, and most companies reported excellent results for the first quarter of this year. Looking at all these factors, the market can only boom," an investor said.

The initial public offering (IPO) of Omantel, which is opening next week (June 11, 2005), will enhance the market liquidity. The IPO will add 750 million shares to the market capitalisation.

Based on the IPO price of 1.280, the market capitalisation is expected to go up, at least by RO1 million. The aggregate market capitalisation as at the end of May 2005 stood at more than RO4.5 billion. Omantel market capitalisation will only enhance liquidity and growth of the market.

Market-men and analysts whom Times Business spoke to said: "Both local and regional investors are pouring in good money. It seems that they are willing to take more risks, and may strongly believe that the current valuations are attractive. Possibilities of the index touching a new all-time cannot be rued out."

"It is a historic moment in the history of MSM, and more significantly, the index peaked to a historical all-time high, which is against the conventional thinking that the Omantel IPO may affect the market negatively during the offer time," K. Gopakumar, assistant general manager, Treasury and Investment Banking at BankMuscat told Times Business.

Gopakumar said: "The current market trend indicates that there is enough depth and liquidity in the market, and the market is poised for further growth after completion of the Omantel IPO.

"The stability has been made possible because of the open and transparent policies of the market, which attract, local, foreign and regional investors. Now, investors are very conscious and the current MSM price to earnings multiple (P/E) stands lower at 15, which is not very high," the general manger of a Dubai-based investment firm opined. The MSM index is seen emerging as an accepted barometer of the domestic economy.

When contacted, Fincorp Chief Executive Haythem Macki said: "Essentially, the economy is in a good shape. In real terms, now, we are witnessing an economy with strong fundamentals in the past 20 years."

Haythem said: "All the components of the economy, including oil prices, are at strong levels. Laws and regulations governing the market have become more advanced, and the supervision of the economy has been matured. Foreign investment policies are more investor-friendly.

"There are very clear indicators that the economy is being transformed into a more diversified one - from a trade-based economy to an industrially developed country with more focus on tourism, manufacturing, services, etc. I foresee a lot more developments to come in the next five years. "Omantel IPO is a clear indication that the government is committed to promote the local stock market, and make it more attractive to investors. Omantel IPO will help MSM rise to one of the largest markets in the region, in terms of market capitalisation," Haythem added.

Hassan Ali Jawad, managing partner of United Securities said: "Markets in the region are strong. Today most AGCC markets registered record volumes and indices tested new highs. "The MSM index had peaked to very high levels during 1997-98. But now, the situation is entirely different, especially in terms of transparency and accountability. Several investors from the regional markets are coming to Oman." Jawad said there might be some corrections, but we are upbeat about the future. There will be more subscribers for Omantel IPO, resulting in a positive impact on the market.

The MSM 30 index gained 3.12 per cent yesterday as against the previous close of 5,013.97 points. Banking and Investment, Services and Insurance and Industry sector insurances gained 3.23 per cent, 3.29 per cent and 2.52 per cent, respectively. The market turnover stood at RO8.35 million. In 2,019 trades, more than two million securities changed hands yesterday.

Bull run continued at select counters such as Renaissance Services, Onic Holding, BankMuscat, BankDhofar, National Bank of Oman, Oman Cement, OIB, Trasngulf, Salalah Mills, Port Services Corporation, Oman Flour Mills , AES Barka, Raysut Cement, Oman & Emirates Investment, Ominvest, Shell Oman, etc.

By Palazhi Ashok Kumar

© Times of Oman 2005

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