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MENAFN - Muscat Daily - 03/11/2012

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(MENAFN - Muscat Daily) The local market was open for just one day last week owing to the Eid al Adha holidays. Despite the holidays, which resulted in major institutions and companies keeping away and some markets remaining closed, trading was relatively active and the benchmark MSM30 index ended the week on a positive note at 5,688.63, gaining 0.51 per cent week-on-week backed by all the subindices.The Al Arabi Oman 20 index gained 0.76 per cent to close at 1,047.12 as turnover amounted to RO11.85mn. The Al Arabi GCC 50 index added 0.14 per cent to 973.52, while the Al Arabi MENA200 index put on 0.09 per cent to close at 925.4. All the subindices posted positive gains, lead by the Services index, which rose 0.75 per cent on a weekly basis, supported by telecom shares and Renaissance Services in addition to Al Jazeira Services and ACWA Power Barka.SMN Power Holding's board of directors recommended an interim cash dividend of 36.6 per cent (366bz per share) from the separate audited accounts of the company for 9M'12. The company announced that it paid off the outstanding balance of a subordinated loan totalling RO9.95mn.ACWA Power stock increased 2.2 per cent on a weekly basis to 425bz per share, on the back of a good quarterly performance in the third quarter of this year as the company's net profit rose by 8.2 per cent quarter-on-quarter to RO2.75mn.The Financial index rose 0.64 per cent w-t-w on the good performance of banks and holding and investment companies. The Industrial index increased 0.28 per cent w-t-w to close at 7,204.39, supported by Al Anwar Ceramic Tiles, Al Jazeera Steel Products, Oman Fisheries and National Aluminium Products.Institutional investors (local and foreign) continued to dominate the market with a net purchase of RO2.03mn.On analysing the MSM30 performance in October, we observe the following:-      Notable presence of local and foreign institutional investments improved market depth.-      Overall delay in corporate results announcements.-      Relatively slow market reaction to corporate results.-      Healthy quarterly performance by most companies, especially in the leasing sector and few banks.-      Third consecutive monthly increase for the benchmark index, with the MSM30 ending the month with a gain of 2.27 per cent on a monthly basis. The Services index continued its notable performance, in sync with our view, and closed the month with a 3.37 per cent m-o-m gain, which can be attributed to the healthy performance of Omantel, Renaissance and oil marketing companies.The Industrial index stood second with an increase of two per cent on a monthly basis to 7,184.42 thanks to cement shares, Oman Refreshment and Al Anwar Ceramics.The International Monetary Fund (IMF) predicted that Oman's gross domestic product (GDP) growth will slow to five per cent in 2012 from 5.4 per cent last year. The Fund also anticipates that Oman's economic growth will slow further to 3.9 per cent in 2013.In its report, the IMF has predicted Oman's fiscal surplus to be 7.1 per cent of GDP this year, down from 8.1 per cent in 2011. It also expects Oman's fiscal surplus to decline to 5.8 per cent of GDP in 2013.In the GCC, markets remained closed for the better part of last week on account of Eid holidays. Abu Dhabi-listed Dana Gas fell sharply on news of the company's inability to honour the repayment of its sukuk on maturity (October 31).The stock fall sharply on the news and decline in quarterly  profits. Dana, which has operations in UAE, Egypt and Iraq's Kurdistan region, has for months been seeking a restructuring of its sukuk as it faced cash-flow issues prompted by repayment troubles as a result of the region's political tumult.Ambiguity on repayment terms of the US920mn bond persisted at the time of publishing this report. The region's largest port operator, DP World, rose sharply on Thursday, reacting to positive trade-related macro data. The company missed its Q3 expectations marginally, but analysts site expansion of the T2 terminal at Jebel Ali to serve as an earnings accretive trigger in the short-termDuring the week, Qatar Exchange topped among the GCC markets, posting a 1.03 per cent w-t-w rise, followed by the Abu Dhabi Exchange and MSM.The US and European markets stayed flat after market losses pertaining to weak earnings data were offset by news of better-than-expected GDP, released at the end of last week. US GDP grew two per cent in Q3'12 as opposed to expectations of 1.8 per cent and 1.3 per cent in the preceding quarters, driven by improved personal consumption and more federal spending.Stock exchanges in the United States remained suspended on account of Sandy' - a storm that devastated most of eastern United States.The enormous rebuilding demand following the catastrophe is expected to drive order books for construction and industrial stocks in the US over the medium term as state governments increase their allocation towards reconstruction activity.European stocks stayed afloat relative to last week's close inspite of concerning political news from Greece as earnings for the 3Q'12 cheered investors. Fiat Industrial and Lufthansa are among those companies which did well. In Asia, another improvement in the Chinese PMI to 50.2 into expansionary territory, for the month of October saw a rebound in Asian markets with the Hang Seng rising sharply in intra-day trading on October 31.Recent positive data from China pertaining to improving retail sales and rebounding export data has also supported the index.WTI crude prices have fallen 6.5 per cent so far in October and 13.5 per cent  this year. Gold prices rebounded this week after a sharp sell off in the preceding week as improving data from the world's second largest consumer, China, buoyed prices.Traders expect gold prices to continue to rise driven by demand from exchange-trade funds (ETFs) and the emerging market economies of India and China, the largest consumers and the largest source of increment demand respectively.RecommendationWe continue to advise investors not to build new positions and to review portfolios in the coming period. We maintain our positive view on the market in general and specific sectors in particular with more concentration on defensive stocks in the absence of complete information.


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