Despite the market volatility throughout the Gulf Cooperation Council (GCC) region, the Muscat Securities Market (MSM) has experienced overall growth of 12% in 2006.
In a report issued in August, Merrill Lynch named Oman as one of the top four most attractive markets in the Middle East and North Africa region. The other countries named in the report were Egypt, Bahrain and Kuwait.
Neighboring markets in the Gulf slumped from record highs earlier last year. In Saudi Arabia, the downturn came after three years of growth.
Ahmed Saleh al-Marhoon, the director general of the MSM, said that what happened this year was unprecedented in the region. The unrealistic index increases were bound to lead to a correction, which is what started happening in late February 2006.
In Saudi Arabia, the Tadawul All Share Index grew almost eightfold between March 2003 and February 2006. By late November, the Tadawul was operating 49% lower than the same period during the previous year. Meanwhile, the Dubai Financial Market had fallen 64% and Doha 42% over the same period.
MSM sees realistic increase
Comparatively, the MSM did not suffer from such a slump. “If you trace the movements, you will see a realistic increase reflecting real economic growth,” al-Marhoon said.
A small dip was recorded from March through the summer and al-Marhoon explained this as normal market behavior. “The MSM is not immune to sentiments in the region,” he added.
A limitation for attracting investors to the MSM, despite its stability, is its size. The market has about 140 listed companies of which about 40 actually get traded. The Bank Sohar initial public offering (IPO) was the only IPO released on the market in 2006.
Earlier in January, Bank Sohar released the $51.9 million IPO, which represents 40% of the total paid up capital, the minimum required to be listed on the MSM as decided by the regulator, the IPO oversubscribed by six times.
The market wants more IPOs
Al-Marhoon said that the market would like to see more IPOs, as a way to enrich it and attract more investors.
A number of other IPOs were expected last year, notably through government privatization. However, these have been delayed. Al-Marhoon said the government was still committed to privatization but procedural matters had to be dealt with.
Meanwhile, Galfar Engineering and Contracting, the sultanate’s largest private construction company, announced last July that it would go public by November, but this was delayed until 2007. The company is expected to release $130 million, said Mohammed Ali, the managing director of Galfar.
Al-Marhoon said that most IPOs expected over the next few years would come from some of the new tourism developments and oil related industries.
The MSM has also identified the large family businesses and groups that are active in the private sector, which as of yet have tended not to go public.
Al-Marhoon said that he would like to see more family businesses go public. He said it was in their interest, as it would allow for new blood, new ideas and diversification.
