VIEWPOINT
POSITIVE SENTIMENTS
The presence of oil prices above the budgeted levels and the continuing efforts taken by the Government towards infrastructure development makes Oman an attractive market for the long term equity investors, says Sankar Kailasam, Senior Vice President (Asset Management), Gulf Baader Capital Markets (GBCM)
For Oman equities, 2010 started off on an upbeat note with the benchmark index, MSM 30, ended the Àrst quarter gaining 5.2 per cent owing to the signs of improved economy, strengthening oil prices and the expectations of improved corporate performance. But May this year was the worst month for equities after October 2008 debacle as it wiped out the entire gain accumulated during the Àrst four months of the year. MSM 30 Index touched its yearly low of 6,058.11 on 30 June. The better than expected second quarter results lifted the market in the month of July which witnessed a gain of 3.9 per cent. The market activity remained range bound during the month of August with the onset of the Holy month of Ramadan. Post Eid holidays, the markets bounced back with buying seen at lower levels and had a positive closing for the September month. For the nine months period, MSM 30 Index ended with a gain of 1.63 per cent.
“This year the most notable development in the securities market was the launch of long awaited initial public offer (IPO) of Omani Qatari Telecommunication Company (Nawras)”
This year the most notable development in the securities market was the launch of long awaited initial public offer (IPO) of Omani Qatari Telecommunication Company (Nawras). Despite a lukewarm response in the retail segment, the IPO successfully raised a total of RO 182 million with a listing price of RO 0.702 per share. At the end of the Àrst day of trading, the telecom major’s shares closed at RO 0.740 per share. On the Àrst day, 8.413 million shares exchanged hands. The IPO was unique in many ways being the biggest IPO in Oman since 2005, and the second largest of all time in the Sultanate. The IPO was the largest to take place in the GCC since July 2009. The IPO was also the Àrst ever offer in Oman to be completed using the book-building method which determined the share price of the offering based on actual demand from institutional investors. CORPORATE PERFORMANCE – MIXED BAG The banking sector was marred by risk aversion and banks in general limited their growth in the loan books. Despite the Government assisting the banks through deployment of the deposits in the commercial banking sector as against the central government, to compensate the fall in the supply from international banks, the banks have used the same to strengthen the liability side and maintain proÀtability. For the Àrst half of FY2010, the banking sector has shown a growth of 3 per cent in the bottomline and 7.5 per cent growth in the topline. Among the Investment Holding segment, the poor market conditions that prevailed during the second quarter took its toll on the earnings of the investment holding companies. Under the industry segment, the cement majors showed signs of disturbance in the market due to dumping by the UAE players in the Omani market. The cement realisation has declined dramatically thereby hitting the topline of the players - Oman Cement and Raysut Cement - in Oman. The contracting companies showed contrasting performance with Galfar reporting a not so impressive performance during the period due to high contract costs which escalated on the back of Muscat Expressway project. In the same time, Al Hassan reported better growth in topline as well as bottomline. Under the service sector, the oil marketing companies had shown considerable growth on a sequential basis with improvement seen in overall sales volume. The sector major, Omantel reported a drop in earnings due to lower usage revenues and increased competition seen in the sector. The sector showed 10.6 per cent growth in the topline; however the bottomline was impacted by 10.4 per cent.