Oman's Investment Market and Decision Making

Oman’s Investment Market 1
Oman’s Investment Market: Decision making
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1. Introduction:
When evaluating a long term investment decision, investors spend more time on the
fundamental factors such as analysing a company, the market and the company’s stock.
Fundamental analysis refers to the process of evaluating the intrinsic value of a security/
stock by considering all components of the market and company. Fundamental analysis
considers both the tangible assets such as land, equipment and buildings and the intangible
assets such as trademarks, branding, intellectual property, trademarks and patents in
analysing the security investment. For instance, when reviewing a stock market, fundamental
analysis considers all the economic factors and industry conditions. Fundamental analysis
helps investors compare the price assigned to a stock and its current price in the market. The
comparison helps investors to decide whether or not a stock is worth buying in because it is
under-priced or it’s worth selling because it is overpriced.
Fundamental analysis uses key ratios as tools of determine stock valuation in the market. The
fundamental analysis tools focus on stock growth, market value and earnings. Some of the
factors that fundamental analysis focuses to establish are Earnings per Share (EPS), Price to
Earnings Ratio (P/E), Projected Earnings Growth (PEG), Price to Sales Ratio (P/S), Price to
Book Ratio (P/B), Dividend Payout Ratio, Dividend Yield, and Return on Equity (ROE)
(Tracy, 2012, p. 45).
This report focuses on analysing the price and performance of stock for several companies
operating in in the Muscat Securities Market. The analysis evaluates the viability of investing
in the respective stock. Some of the companies under evaluation are Dhofar Insurance,
Global Financial Investment, National Finance, Al-Oula Company, Al Hasan Engineering,
Computer Stationery Ind., Construction Material Industry, Muscat Gases, Muscat City
Desalination, and United Power. The report is divided into three parts, namely country

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analysis, industry analysis, and company analysis. Lastly company analysis has been
evaluated using key ratios such as EPS, DPS, ROI, PE ratio and NPR.
Muscat Securities Market and its principal index, which is MSM -30
The Muscat Securities Market was founded in 21st June 1988 by the Royal Decree. The
Muscat Securities is the only market in Omani that deals with the stock exchange. It has the
responsibility to control and regulate the Omani’s market security (Muscat Securities Market,
2018). The market also collaborates with other stakeholders to develop infrastructures that
support the development of the financial sector in the country.
The Muscat Securities Market uses a MSM 30 index, which represents 30 most liquid,
profitable and capitalize companies listed on the market. The leading objectives of the MSM
30 index is to determine the price movement of stocks of the listed companies. The objective
analysis offers a guide to the investors during their investment processes and decision making
(Muscat Securities Market, 2018). To fully serve its objectives, the MSM 30 index has the
following features. First, it comprises of freely available shares only. Second, the capping is
rated at 10% to offer a wider representation of smaller companies in the market. And third,
the capping and free float of shares reviewed and revised on a quarterly basis to ensure a fair
representation (Muscat Securities Market, 2018).
2. Methodology:
a) Data Collection
Data collection is a vital part of any research or analysis. The accuracy and reliability of the
research finding highly depend on the quality of data collected. Therefore, to observe
reliability and accuracy of the results, secondary data collection method was chosen. Data
from the Muscat Securities Market was obtained from online searches and the official
website. Although, the MSM has at least thirty listed companies, only ten companies were
chosen to be studied in this report. The sampling was done randomly based on the industry/

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business sectors that the companies operated in. The companies chosen for the study were
Dhofar Insurance, Global Financial Investment, National Finance, Al-Oula Company, Al
Hasan Engineering, Computer Stationery Ind., Construction Material Industry, Muscat Gases,
Muscat City Desalination, and United Power. It was easier to obtain data of the companies’
performance in the Oman market because they are all listed in the MSM.
For a comprehensive country analysis, data such on Oman’s GDP, Interest rates, oil prices,
Exchange rates, Consumer Price Index (CPI), and Product Price Index (PPI) was considered.
Secondary data on these economic parameters of Oman was obtained from online websites,
peer-reviewed sources and online databases.
b) Period of study
The data collected was for a period of one year between 2017/2018 years on a daily basis.
3. Application of Fundamental Analysis:
This section covers the analysis of the secondary data collected from the MSM as well as the
country’s economic parameters. The fundamental analysis has considered country analysis,
industry analysis and company analysis as the most appropriate tools to evaluate the stock
price and performance for respective companies in the MSM.
 Country Analysis
Oman in the smallest member of the United Arab Emirates (UAE) based on its population.
The country is also the smallest kingdom in the region and has been ruled by Sultan Qaboos
Al-Said since 1970. Oman heavily depend on its oil resources to generate revenues;
approximately 80% of the government revenues comes from oil resources. Likewise, gas and
tourism industry also play a key component in revenue generation and diversification of the
government strategies (Arabian Business, 2018, p. 56).