MSM gets National Day present of RO150 million
World news agencies reported yesterday that Oman's minister of commerce and industry, Maqbool Ali Sultan, had announced a RO150 million (US$389 million) bail-out of the Muscat Securities Market (MSM), Oman's stock market.
The value of the MSM index has fallen from 11554.69 points at the end of May 2008 to 5,846.19 on November 17th.
In October, Mr Sultan had attempted to allay fears of a financial meltdown, reminding his listeners that Oman had one of the best-performing markets in the Gulf countries, even though it is the smallest bourse, and that the 'earning per share is slightly less than 9 per cent.'
Furthermore, "profits had grown by more than 42% in the third quarter of this year. Listed companies had achieved 54 per cent growth or RO411 million profits during the first half of this year against RO266 million in the same period last year."
At the end of March this year, 30% of stocks were owned by foreign investors. These investors have retreated and the loss of confidence has been contagious. Even successful companies such as Galfar Engineering and Renaissance Services have not been immune from selling.
The Omani government is putting in 60% of the bail-out funds while the private sector and pension funds are contributing the remaining 40%. The objective is to buy up shares that no-one else wants to buy, in a bid to stabilise the market.
Care will be needed in deciding when it would be appropriate for the fund to resell the shares it has bought back to the market, in order to avoid another downward spiral in prices. The question remains as to whether the move was in response to broad market conditions or as a result of pressure from small investors.
The market gained three percent once the news had been announced.
Oman's fund is modest. Kuwait's sovereign wealth fund is to pump at least 1billion Kuwaiti dinars into Kuwait's stock exchange over the next five years, while the "Qatar Investment Authority said last month that it would buy between 10 per cent and 20 per cent of banks’ shares on the Qatar bourse, at a cost of about $5.3bn."
The value of the MSM index has fallen from 11554.69 points at the end of May 2008 to 5,846.19 on November 17th.
In October, Mr Sultan had attempted to allay fears of a financial meltdown, reminding his listeners that Oman had one of the best-performing markets in the Gulf countries, even though it is the smallest bourse, and that the 'earning per share is slightly less than 9 per cent.'
Furthermore, "profits had grown by more than 42% in the third quarter of this year. Listed companies had achieved 54 per cent growth or RO411 million profits during the first half of this year against RO266 million in the same period last year."
At the end of March this year, 30% of stocks were owned by foreign investors. These investors have retreated and the loss of confidence has been contagious. Even successful companies such as Galfar Engineering and Renaissance Services have not been immune from selling.
The Omani government is putting in 60% of the bail-out funds while the private sector and pension funds are contributing the remaining 40%. The objective is to buy up shares that no-one else wants to buy, in a bid to stabilise the market.
Care will be needed in deciding when it would be appropriate for the fund to resell the shares it has bought back to the market, in order to avoid another downward spiral in prices. The question remains as to whether the move was in response to broad market conditions or as a result of pressure from small investors.
The market gained three percent once the news had been announced.
Oman's fund is modest. Kuwait's sovereign wealth fund is to pump at least 1billion Kuwaiti dinars into Kuwait's stock exchange over the next five years, while the "Qatar Investment Authority said last month that it would buy between 10 per cent and 20 per cent of banks’ shares on the Qatar bourse, at a cost of about $5.3bn."
Oman's oil minister blames financial crisis for possible project slowdown
Oman's Oil and Gas minister, HE Mohammad bin Hamad bin Seif al-Rumhy, has conceded that Oman will have to slow down oil and gas development projects and possibly also the Duqm Refining and Petrochemical Complex as a result of the global financial crisis.
Rumhi was talking to a Reuters correspondent at the Abu Dhabi International Petroleum Exhibition and Conference at which Gordon Brown, the British Prime Minister, spoke at his first appointment in the UAE, on his four-day tour of the Gulf. Brown is seeking to raise funds at the conference on behalf of the International Monetary Fund (IMF) to assist countries badly hit by the crisis.
Although Rumhi's pronouncement might be thought to tally with the caution that could accompany drafting of next year's budget, (see my previous posting) , he stated that the problem actually lies with external project finance. It's far more difficult to raise funds now than even just six months ago. Even if foreign loans are to pay for these downstream projects, Oman has to guarantee the payback.
It doesn't help that the development costs are rising.
And while Iran remains ebullient about Oman's cooperation in development of the Kish oil field, Rumhi would say only that talks are still ongoing.
The UAE's oil minister announced this morning that the UAE had implemented oil production cuts agreed by OPEC. Kuwait and Nigeria were said to have informed customers that there would be cuts in supply from December. Iran is reported to have told the Indian Oil Corporation that supply would be reduced by 5% from this month. But there's no word yet of imminent production cuts by Saudi Arabia, the biggest oil producer.
Oman is not a member of OPEC, but keeps an interested watching brief. Read this very interesting background on HE Muhammad al-Rumhi, his plans for Petroleum Development Oman and Qalhat LNG, and the development of Oman's oil and gas industry. Rumhi's stated aim is to optimise oil and gas production as a long-term strategy in Oman.
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As a measure of the impact of inflation in Oman, the total cost of The Wave, a real estate project near Muscat has doubled from '$2 billion (Dh7.3bn) to $4bn since its launch nearly two years ago.' Nick Smith, the CEO, blamed inflation for 15-20% of the increase in project cost. The remainder is due to the increased construction costs for building 'new phases and hotels.' ie, amending the project spec.
Rumhi was talking to a Reuters correspondent at the Abu Dhabi International Petroleum Exhibition and Conference at which Gordon Brown, the British Prime Minister, spoke at his first appointment in the UAE, on his four-day tour of the Gulf. Brown is seeking to raise funds at the conference on behalf of the International Monetary Fund (IMF) to assist countries badly hit by the crisis.
Although Rumhi's pronouncement might be thought to tally with the caution that could accompany drafting of next year's budget, (see my previous posting) , he stated that the problem actually lies with external project finance. It's far more difficult to raise funds now than even just six months ago. Even if foreign loans are to pay for these downstream projects, Oman has to guarantee the payback.
It doesn't help that the development costs are rising.
And while Iran remains ebullient about Oman's cooperation in development of the Kish oil field, Rumhi would say only that talks are still ongoing.
The UAE's oil minister announced this morning that the UAE had implemented oil production cuts agreed by OPEC. Kuwait and Nigeria were said to have informed customers that there would be cuts in supply from December. Iran is reported to have told the Indian Oil Corporation that supply would be reduced by 5% from this month. But there's no word yet of imminent production cuts by Saudi Arabia, the biggest oil producer.
Oman is not a member of OPEC, but keeps an interested watching brief. Read this very interesting background on HE Muhammad al-Rumhi, his plans for Petroleum Development Oman and Qalhat LNG, and the development of Oman's oil and gas industry. Rumhi's stated aim is to optimise oil and gas production as a long-term strategy in Oman.
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As a measure of the impact of inflation in Oman, the total cost of The Wave, a real estate project near Muscat has doubled from '$2 billion (Dh7.3bn) to $4bn since its launch nearly two years ago.' Nick Smith, the CEO, blamed inflation for 15-20% of the increase in project cost. The remainder is due to the increased construction costs for building 'new phases and hotels.' ie, amending the project spec.