MARKET WATCH

Oman 2016 | FINANCE | INTERVIEW

TBY talks to Ahmed Saleh Al Marhoon, Director General of Muscat Securities Market (MSM), on the growth trajectory of the Muscat Securities Market, the evolution of IPOs, and future trends in the industry.

Ahmed Saleh Al Marhoon
BIOGRAPHY
Ahmed Saleh Al Marhoon is the Director General and a board member of MSM. Additionally, he serves as Chairman of Muscat Clearing & Depositary Co. S.A.O.C, and acts as Director of the Capital Market Authority.

How has MSM performed over the past year?

In 1H2014, we saw some growth in the index and trading volumes, but the sharp decline in oil prices later in the last year affected the index and liquidity of the market. In the end of 2014 we had a 7% decline against 8% growth at 1H2014. It was a mixed year from start to end, but this is normal given Oman's dependence on oil revenues. Many of our projects are also financed by the Treasury; if income is not supporting expenditure, then perceptions change. This is despite the fact that the government has announced on many occasions that major projects will continue as planned. Though oil prices have an impact on our market psychologically, the drop has not had much effect on the performance of the economy because the expenditure is not affected by declines in oil prices.

Last year, you assessed IPOs as one of the main challenges for the Omani market. How do you see the incentives increasing for IPOs, and have you seen any evolution in the past year?

This is always our focus. Although the MSM was weak during the years following the 1998 MSM financial crisis, our daily volumes were considered higher than three GCC exchanges combined i.e., Dubai, Abu Dhabi, and Qatar. What that indicates is that IPOs in those exchanges made volumes grow and that liquidity reflects the size of the market. Unfortunately in our case, the IPOs don't meet expectations, which is why our market is not classified as an emerging market, like the UAE and Qatar. This is not due to the regulations or the systems that we are using, but because the size of our market is connected to the lack of the IPOs and liquidity. IPOs are also critical for encouraging new entrepreneurs to enter into the market and giving the confidence to invest. Entrepreneurs and investors want a liquid market, and we are hoping that the government realizes how imperative this is.

Can you expand on the effect the return of His Majesty has had on the MSM?

We are thankful for the health of His Majesty, and his presence in the country creates a peace of mind not only for locals, but also foreigners. We have always been proud of the stability of Oman. It is a nation without fighting factions, and we are all proud to be Omani. Besides having peace, the economy is also performing better. All the companies that have announced profits for 4Q2014 found that profits exceeded expectations from previous years. It is expected that 1Q2015 will be even better than the close of last year, which is why we have seen continued improvement in the index. There are many issues of concern in the region, but overall Oman is a haven among other countries. We are hoping to attract more investment by the growth of the listed companies.

What are the major potential growth areas in the market?

We hope the government will sell assets to increase revenues and that more IPOs will develop from government-owned companies. We are also hoping to see more development bonds and an increase in the sukuk.

What are your expectations for the coming year and your long-term outlook on the market?

We are confident that peace will prevail in the region, and that we will be able to look towards the future with confidence, as opposed to the same concerns of the past. Oil prices have had an impact on many things, but as we have heard from government officials, major projects will not be affected. An advantage now is that we have comprehensive infrastructure that give the country the boost to move forward and make us better able to attract investments.