Oman’s stock market is opening up to foreign investors while at the same time trying to attract local institutional and individual investors. Three investment funds are available and they are being aggressively marketed with the encouragement of the Muscat Securities Market, MSM, the Gulf country’s five-year-old stock exchange. ”The funds give us a chance to increase the number of investors and they could play a key role in activating the stock market,” MSM Director General Mahamoud bin Mohamed al-Jarwani has said. The three funds listed on the MSM are: the Oryx Joint Investment Account, or Oryx JIA, the Majan Special Opportunities Joint Investment Account, and the Muscat Index Fund, MIF. Oryx JIA figures for the first half of 1995 showed a net profit of 738,431 Omani rials ($2 milion) for the fund’s first full year of operation. The fund’s net asset value increased by 4.4 percent in the first half of 1995, against a 0.9 percent increase in the MSM Index, Oryx JIA chairman Salim bin Ali bin Assiyabi said last week. ”Technically, we raised 20 million rials ($8 million), 51 percent in Oman and 49 percent from a spread of very large international investment institutions,” Miles Morland told journalists on Sunday. Morland, chairman of Blakeney Management Ltd. and a member of the $57 million Oryx JIA investment committee, said the fund served as a first introduction to Oman for several big investing institutions. Subscriptions to Majan JIA’s initial 7 million rials ($2.7 million) share flotation close on Oct. 16.
Set up by Gibcorp Oman, an Omani financial services group, and the Oman and Emirates Investment Holding, OEIHC, the fund seeks small investors. Non-Omanis may also invest but not exceeding the minimum 51 percent participation level set for Omani nationals. The Oryx JIA is confined to the Omani listed sector, but Majan JIA seeks a broader diversification of its portfolio that focuses on Oman as well as other oil-rich Gulf states. ”Diversification is the strength of the Majan JIA,” Ian Longhurst of OEIHC told United Press International. ”In this respect the fund is exciting and innovative,” he said, adding, ”For individuals in particular, it is difficult to diversify their assets to even out the risk. We are capable of doing this for them.”
Longhurst, pointing out the ideal investment conditions in Oman, said, ”The MSM is an emerging market and still relatively small. As a result, the price and earnings ratio here is not extravagant. This makes the MSM a low cost market and therefore attractive.” The P/E ratio represents the current market price of a company’s stock expressed as a multiple of its total per share earnings for the previous 12 months. The World Bank figures show that the average P/E ratio for all the bigger emerging markets currently stands at 20.5, compared with the MSM’s P/E ratio of 9.7 forecast for 1995, which makes Oman one of the cheapest markets in the world. ”Oman’s economy is slowly growing and it is very stable. In the meantime, if more foreigners will invest the share prices can only come up. The potential is there. I expect a massive leap in the coming years, ” Longhburst said. Asset allocation targets of the Majan JIA will be 25 percent in listed Omani growth stocks, 25 percent in new issues and other MSM listed securities, 25 percent in overseas growth portfolio and 25 percent in venture capital in Oman. The 25 percent overseas growth porfolio is meant to balance the fund, Longhurst said, and would include stocks from developed markets, such as the the Montgomery Asset Management on the West Coast of the United States, whose stocks have exceptional growth. ”The venture capital sounds as a high risk, but you can accurately analyze even start-up situations,” Longhurst said. Candidates for funding will be people with a good idea, but not enough working capital, he said. ”We will buy 10 to 15 percent in it, if the idea has good profit potentials. In this way we give little guys the opportunity to become big guys,” Longhurst added. Initiators OEIHC and Gibcorp will co-invest in the Majan JIA, which will continue for seven years from inception, although it may be extended for a further five years with the majority consent of the unit holders. Gibcorp sees its role as a catalyst — profitably encouraging the expansion and extension of the commercial and industrial economy of Oman. The OEICH is a joint venture established in 1994 by Oman and the United Arab Emirates, UAE, each holding 30 percent equity. The remaining 40 percent equity is held by major financial institutions and private sector investors from both countries. The OEICH’s main objective is to promote investment opportunities in diverse sectors in Oman and the UAE. The MIF, managed by the Bank Muscat al-Ahli al-Omani, is also open to Omani and foreign investors but confines investment only in MSM listed companies. Subscriptions to its 3 million rials ($1.1 million) shares floated on Sept. 19 close on Oct. 18. ——
[This news feature is part of the United Press International Middle East Business Information Services.]