Oman delays plan for a separate SME exchange

Economic slowdown and the sluggish trend in the secondary market delayed the plan

  
A tourist's reflection is caught in the mirror of an antiques shop in Mattrah Souq, the oldest market in Oman, in the capital Muscat October 28, 2007.

A tourist's reflection is caught in the mirror of an antiques shop in Mattrah Souq, the oldest market in Oman, in the capital Muscat October 28, 2007.

REUTERS/Ahmed Jadallah
26 September 2016
Muscat: A proposal to develop a separate bourse for small and medium industries is getting delayed due to the ongoing economic slowdown and the consequent sluggish trend in the secondary market.

The Muscat Securities Market (MSM) came up with a plan to develop an exchange exclusively for small and medium firms almost two years ago in line with successful SME markets in the world.

"The project has slowed down now. We will see the market conditions and (wait for) a recovery in oil prices (to proceed with the plan). The current market condition is not conducive (for developing such a bourse)," Sheikh Abdullah Salem Al Salmi, executive president of the Capital Market Authority, told the Times of Oman.

Oman has over 90,000 small and medium units, which collectively contribute 13-14 per cent of the country's gross domestic product (GDP).

Al Salmi said a Taiwanese agency had conducted a feasibility study for an exchange model for small and medium enterprises in Oman. "It requires certain elements to be in place." The market has to take into account certain legal issues for developing a separate market for small and medium industries.However, he said that the idea has not yet been scrapped.

Al Salmi said an SME exchange will not only allow small firms to raise funds from investing public, but also give them recognition when they deal with financial institutions.

"They can say that they are under the umbrella of the Capital Market Authority (CMA), which providesa certain level of credibility."

Besides, linking with a brokerage house will help these firms to disclose information.

Listing of small and medium industries will also help them to grow from a small business unit into large corporate houses.

The market authorities have undertaken a detailed assessment of various approaches used by stock exchanges for SME bourses. This also included an assessment of the relative impact and benefits of these approaches on the overall development of SMEs, returns to investors and market participants, and benefits to clients and suppliers of SMEs.

Listing will also help the suppliers and clients with better access to information on the prospect of doing business with SMEs.

The CMA chief said several companies, including family businesses, are eligible for listing on the small and medium bourse if the market decides to proceed with the plan.

In case the authorities do that, the bourse will bring down the minimum capital required for listing small businesses on the exchange.

On the question of whether it is going to be a separate entity or a part of the Muscat Securities Market, Al Salmi said the issue was being discussed by the authorities.

© Times of Oman 2016

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