MSM ends higher supported by financial sector

All the sub-indices closed lower except Financial


MSM30 closed the week higher by 0.28 per cent supported by the pickup of activity in the financial sector. The turnover and volumes were higher than last week by 14.6 per cent and 51.8 per cent, respectively. Local investors were net buyers while foreigners were net sellers.

All the sub-indices closed lower except Financial. Industrial and Service index were down by 0.57 per cent and 0.63 per cent, respectively while the Financial Index closed up by 0.49 per cent. Shariah Index closed lower by 0.57 per cent w-o-w.

His Majesty Sultan Haitham bin Tarik issued Royal Directives authorizing a programme of interest-free emergency loans to assist some segments of entrepreneurs whose businesses took the brunt of the pandemic, particularly holders of Riyada Card (for small and medium enterprises) and self-employed entrepreneurs, as well as beneficiaries of loans of Oman Development Bank and Al Raffd Fund.

Oman announced regulations for foreign capital investment in the Sultanate. Some of the benefits are outlined below:

  • The Council of Ministers can approve investment project being set up in less developed governorates of the Sultanate and give it certain benefits like exemptions from the exemption from the rental value or return of the right to use the lands and real estate necessary for the investment project for a period not to exceeding five years and exclude them from Omanisation for two years from the date of the actual operation of the project.
  • These projects can be exempted from all duties or some of them. The council of ministers can give other benefits also to the investment project provided they depend on foreign money remitted from abroad according to the rules made by the Central Bank of Oman.
  • It is also permissible to exempt investment projects from some of the prescribed customs and non-customs duties and fees, without prejudice to the provisions of the Common Customs Law for the states of the Gulf Cooperation Council.
  • It is also necessary that the products of the project are not less than 40 per cent Omani if any. The project would export not less than 30 per cent of its production outside the Sultanate. It also must help in the transfer of expertise, modern technology and knowledge to the Sultanate.

Board of directors of Tadawul Financial Services Company, the subsidiary of Al Batinah Development and Investment has decided to take the necessary procedures to liquidate the Company and address the competent authorities to cancel the broker’s license due to loss suffered by the Company.

Muscat Gases Board to sell 30 per cent share in an associate. As per the disclosure the name was not mentioned. However as per the Company financials, Muscat Gases has only one associate which is United Industrial Gases Company in which Muscat Gases owns 30 per cent stake. Muscat Gases acquired a 30 per cent shareholding in United Industrial Gases Company LLC (UIGC), a company engaged in the manufacturing and selling of industrial gases. Investment in UIGC stands at RO 1.81mn as of 1Q20. Total loss reported by the associate Company as per their unaudited results for the period from Jan 1, 2020 to March 31, 2020 was RO 130,316 and Muscat Gases Company SAOG share of loss was RO 39,095 (30 per cent).

Oman reported surplus in the month of April 2020 at RO 189mn. Surplus was largely because of growth in oil revenue and also because of recording the corporate income tax during the month of April. With these numbers, Oman reported surplus in 3 out of first four months of the year. Overall surplus during 4M-20 stood at RO 134.2mn compared to deficit of RO 133mn in 4M-19. Oil revenue was higher by 64 per cent m-o-m during April to RO 765.9mn compared to RO 468.3mn in March 2020. Corporate income tax stood at RO 239.5mn, growth of 157 per cent m-o-m. Overall revenue during 4M-20 stood at RO 3.82bn compared to RO 3.87bn last year, drop of merely 1.2 per cent. Expenditure dropped by 7.8 per cent to RO 3.69bn compared to RO 4.0bn last year. Drop in expenditure was largely because of cut in defence and civil ministries development expenditure by 17.2 per cent and 47.8 per cent, respectively during 4M20.

Latest CBO data for conventional banks indicates that the weighted average Oman Rial interest rate spread (calculated as lending rate minus deposit rate) widened by 8.8bps on year-on year basis (YoY), at 3.554 per cent during the month of Apr’20, as the YoY growth in deposit rate lagged behind the YoY growth in lending rate. On month-on-month (MoM) basis, the spread improved by 1.1bps as deposit rate contraction (-1.2bps) outpaced lending rate decline (-0.1bps). The weighted average deposit rate on RO deposits dropped to 1.924 per cent from the peak of 2.089 per cent (since March 2010) witnessed in Jan’20.

Weighted average FCY spread softened by 14.8bps on month-on-month (MoM) basis during Apr’20 to 2.577 per cent. The FCY spread is lower by 110.7bps when compared to that recorded in Apr’19. The weighted average interest rate on private sector RO time deposits expanded by 5.8bpsMoM and 22.2bps YoY, to 4.039 per cent. The weighted average interest rate on ALL private sector deposits (RO) was 1.463 per cent (-4.8bps MoM and +7.8bps YoY).

(Courtesy: U-Capital)

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