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New focus on investment.

A MOVE INTO a new building with greatly extended facilities next month will mark an opening up of the Muscat Securities Market (MSM). Although MSM opened for business in May 1989, activity has so far been fairly limited but all this looks set to change.

Speaking to The Middle East in Muscat this week, the director-general of MSM, Mahmoud bin Mohamed al Jarwani, confirmed that new government regulations are expected to be introduced before the end of 1993 which will increase both direct investment opportunities and indirect investment through mutual funds.

These moves are designed to encourage local participation as well as to attract non-Omani investors to an arena from which until now they have been largely precluded. Neighbouring Gulf Cooperation Council (GCC) states are expected to be particularly active in stock exchange trading once legislation is passed.

At present Omani companies represent some 90% of all stock traded on the Muscat stock exchange, with Omani-foreign joint ventures accounting for 10% of dealings. "In addition to foreign investment I am optimistic that the new moves will attract Omanis who have not previously been involved in the Securities Market to participate," commented Mahmoud al Jarwani. MSM's director general is optimistic that introduction of the new laws will see a sharp upturn in stock market activity but, pulling no punches, he notes that Oman's traditional prudence has probably already been the cause of a number of missed investment opportunities. "In Oman we are very cautious. Personally I believe that we have already missed a lot of opportunities because of this. Sometimes we take years to reach decisions and during that time important chances are missed. This has been particularly true over the last ten years. A number of projects, for example development of the airport, work on the harbour and the ports, which was supposed to get underway long ago, has only recently started. We lost a lot of opportunities with these schemes alone, opportunities which were picked up by neighbouring countries."

Mahmoud al Jarwani believes that in the past Oman has not been sufficiently aggressive in attracting foreign investment, but he is optimistic that things are about to change. There are, he confirms, already signs of increased activity in the market. "People have realised that the government is very serious about opening up the market and for the past few weeks there has been a general upturn in activity. This stock market is a new concept to Omanis, they are not familiar with it in the way they are familiar with investment in real estate or in commercial trading enterprises.

"It is a new idea and it will take some time before people become fully familiarised with the idea that it is another type of investment business. Obviously they will have to read and to study before they make any decisions. It is not enough just to come to the market and decide to buy this stock or that stock.

"Since MSM opened in May 1989 activity has been slow, but it is undoubtedly picking up. Market capitalisation now is around $2.2bn. Meanwhile the Bahrain stock exchange which opened for business within less than a month of MSM is capitalised at above $4bn, although, of course, they also deal with offshore companies. Within the next six months we expect OR150m worth of new issues. By the end of 1994. I would expect the existing number of investors to double and market capitalisation to reach $2.5bn."

MSM's director-general expects considerable regional interest will be attracted by three new issues. A OR30m Oman-UAE investment company and a OR30m floatation in the Manh power station project are expected to be launched before the end of the month, followed by a OR36m issue in the Oman Cement Company within the next six months.
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Title Annotation:Special Report; Oman
Publication:The Middle East
Date:Nov 1, 1993
Previous Article:Oman's prudence pays off.
Next Article:Keeping in touch.

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