Development of Oman’s securities market

An indicator of sustainable economic growth

17/05/2015 01:07 AST

The onset and evolution of the Securities Market in Oman started soon post the Renaissance with the floatation of the first joint stock company, Oman Hotels in the early 1970s. Thus began the first phase of the development that continued until 1989 by the end of which number of joint stock companies reached close to 70 with shareholders’ equity of RO 269.9 million together held by 17,000 shareholders.

Throughout this first phase, dealing in securities was not very popular owing to the challenges relating to information flow to investors. Thus the Muscat Securities Market (MSM) was established in 1989 as the organised capital market marking the beginning of the second phase in the development process. This phase saw various important milestones including the move from manual trading to electronic trading in 1997 as the first Arab stock exchange to apply electronic dealings.

However, as investor’s participation and trading volumes grew, the much needed restructuring and separation of the regulatory body from the stock exchange took place in the year 1998. This allowed the establishment of three separate bodies, namely the Capital Market Authority (CMA), the Muscat Securities Market and the Muscat Clearance and Depository Company (MCDC).

The MSM was then assigned with the supervision of the executive duties and over the years has witnessed tremendous growth in terms of systems and procedures, administrative mechanisms and legislations in addition to the number of listed companies, trading volumes and price index. Thus, the Omani capital market is built on a strong foundation that was laid over decades and today has over 150 listed securities with a total market capitalisation of RO 14.73 billion and an average daily trading turnover of RO 6.63 million as of the end of the first quarter of this year.

Over the 25 years since its inception, the MSM’s quantum leap in market capitalisation has been supported with growth in corporate performance, improving business sentiment and increasing investor participation. Listed securities have been long term value creators for investors and during the last ten years, the market has also given numerous attractive investment opportunities by way of various attractive initial public offers (IPO) by banks, insurance, telecommunication and power companies. The government and regulators consistently encourage participation in securities by raising awareness among public and enforcing high levels of transparency and corporate governance for protecting investor interest. It also attracts more joint stock companies to the market with feasible listing requirements.

IPOs on the MSM have an impressive track record of offering considerable listing gains and long-term capital appreciation along with consistent cash return in the way of dividends.

Irrespective of the market cycles, companies listed over the last ten years have together created value to the tune of RO 700 million besides paying cash dividends. The dividend yield of MSM is also one of the highest in the region. Considering the tremendous growth the market has achieved, the World Federation of Exchanges granted MSM full membership to the federation in 2012 further exemplifying its operational excellence since inception.

Thus Oman’s capital markets have come a long way and continue to develop and grow with the steady support and focused efforts of the government towards a vision to create a sustainable source of economic growth and wealth creation.

Oman Daily Observer