Capital market.. pillar of economic growth

National diversification programs and initiatives increase future prospects

The sector has many advantages that qualify it for a wider role in development:

39 billion rials of total assets and assets of commercial and Islamic banks –

33.3 billion rials of assets of commercial banks –

6.2 billion assets of Islamic banks and windows –

1.1 billion assets of financing and leasing companies –

1.2 billion assets of insurance companies –

23 billion market value of the Muscat Stock Exchange –

1.1 billion issuance of sukuk and commercial bonds by the private sector.

3.7 billion government bonds and sukuk listed on the stock exchange –

Capital markets are one of the most important drivers of growth in various countries, as they play a major role in mobilizing savings and investments and facilitating their transfer between different economic sectors through investment, partnership and financing operations. The contribution of financial sectors to economic growth is related to their flexibility and ability to grow and maximize wealth. They largely contribute to the interdependence between the local financial sector and similar sectors at the regional and international level.

The capital market represents one of the largest economic and investment sectors in the Sultanate of Oman, and this sector mainly consists of commercial banks, banks, Islamic windows, insurance, financing and leasing companies, in addition to the Muscat Stock Exchange, including companies and institutions with various activities, investment funds, securities, bonds, government and commercial instruments. Also, this sector is preparing to enter various investment activities in accordance with the legal changes that regulate the sector, including investment banks and modern financial instruments such as financial derivatives and future contracts The Central Bank of Oman has also approved applications for licenses to provide electronic payment services in the Sultanate of Oman to support and keep pace with technical developments and advanced electronic products and services in various fields.

Good growth and resistance to crises

Statistics show that the total assets and assets of the commercial and Islamic banking sector exceed 39 billion Omani Riyals by the end of the first half of this year, issued by the Central Bank of Oman, and the assets of financing and leasing companies amount to more than 1.1 billion Omani Riyals, while the market value of companies, bonds and securities listed on the Muscat Stock Exchange exceeds 23 billion Omani Rials, and the volume of sukuk and bond issuance by the private sector and listed on the Muscat Stock Exchange was about OMR 1.1 billion, while the volume of government government bonds and sukuk listed on the stock exchange amounted to about 3.7 billion OMR. The volume of assets of insurance companies in the Sultanate of Oman increased by the end of last year to about 1.2 OMR. These statistics follow the strength of the capital sector in the Sultanate of Oman, one of the most important sources of financing and the sector has always contributed significantly to the promotion of growth through the sector’s performance as one of the sectors that maintains up to bre rates of stability and growth or through the contribution of the capital market to the promotion of economic growth and project financing, and the sector has proven to be resilient in facing and overcoming the consequences of one of the most difficult crises facing the Sultanate of Oman and the world after the outbreak of the pandemic in 2020, as well as during the previous ones crisis, including the global financial crisis at the end of the first decade of the current century.

The Sultanate of Oman seeks to increase the role played by the capital market to turn it into a fundamental pillar for sustainable development and a diversified economy. The Royal Directives come to initiate the National Program for Financial Sustainability and Development of the Financial Sector to inaugurate a new phase of growth in the capital market in the Sultanate of Oman in line with the requirements of economic growth and diversification policies. In the light of the tenth five-year plan and the future vision of Oman 2040, which are requirements whose achievement depends on improving the performance of various economic sectors and raising their efficiency and competitiveness through facilitating business, speeding up procedures and creating new sectors that represent additional tributaries to economic growth and diversification of income sources with the aim of radically changing the economic landscape in the Sultanate of Oman, which puts it on a path that enjoys attractiveness and competitiveness at all levels.

With the launch of the vision for the future last year, the Omani government has taken accelerated steps towards expanding the role of the private sector and supporting it to become a partner in development and driver of economic growth and job creation. Government efforts have also paid great attention to strengthening the role of small and medium enterprises due to their important role in supporting growth and fulfilling the aspirations of the youth. One of the most important steps taken to support the private sector was the exit and privatization plan for some companies and the announced government stakes from the Omani Investment Authority to make room for private sector work, as well as several national initiatives and programs being integrated to stimulate growth bringing in new investments and encouraging the local and foreign private sector. To encourage more investment, especially in the sector of economic diversification, and the launch of the vision of the future was paved with a package of advanced laws that included the law on companies, bankruptcy, privatization and foreign investment, and one of the latest laws that witnessed development with the aim of encouraging investment was the law on securities, which works to drive the regulatory level of the paper industry of Finance in the Sultanate of Oman to levels that keep pace with current and future requirements in light of the technical revolution and the legal procedures it imposes to regulate financial technology and create a legal framework for innovative financing tools, and ensuring the provision of a financial environment with more options and a high ability to attract domestic and foreign capital by strengthening confidence by providing a fair investment environment based on integrity and transparency, and contributing Issuing the law to achieving the strategic priorities of the Oman Vision 2040 presented in supporting initiatives that contribute to economic diversification and ensuring financial sustainability, support to the private sector, investment and international cooperation, while providing a competitive and attractive business environment for investments in which the state performs a regulatory role related to efficient work, which is an important aspect in this law, expanding opportunities financing by regulating the introduction of new products and services such as warehouse receipts, financial derivatives and future contracts. The law also encourages the establishment of independent institutions that deal with investment banking, which deal with the provision of advisory services related to financing options, acquisition, control and other services, as well as support programs and initiatives Small business financing and Given the economic importance of this type of institution, whose financing needs are of a special nature, which solve one of the most important challenges faced by entrepreneur owners of small and medium-sized enterprises, contributes to the opening of new channels for the expansion and financing of entrepreneurial projects. .

Flexibility of legislation and diversity of national programs

Meeting the growth requirements during this important phase for the Sultanate of Oman’s economy depends on laying a strong foundation for economic diversification that will be a source of growth and public revenue. To promote economic diversification, it plays a very important role in achieving the strategic objectives through the work of these programs to support economic diversification policies, attract investments, increase exports and provide employment opportunities to citizens.

Within these national programs, the National Program for Financial Sustainability and Development of the Financial Sector is an important link in a series of initiatives and programs aimed at expanding the economic role of the private sector and raising the competitiveness of the business sector. In order to achieve the goals of “Oman’s Vision 2040”, the program will work to increase the efficiency of the capital market and financial liquidity rates, and the ability to attract investments available through the program, while enabling it to be a true representative of the national economy, and to improve financial inclusion and modern financial technologies to raise the capabilities of the financial sector, both in the banking sector and the capital market and the insurance sector, by applying international standards based on the best successful experiences in the field of modern financial technologies; To achieve interdependence with regional and international financial and business institutions, according to the basic features and objectives of the program published by the Ministry of Finance.

Increasing the attractiveness of the stock market

In connection with the launch of the vision of the future, several strategic plans were launched to support the success of all institutions, whether in the financial sector or other economic sectors. The classification of global rating agencies and institutions that define certain criteria for stock exchange classification, and the Muscat Stock Exchange has fulfilled all technical requirements to achieve an emerging market classification and currently focuses on standards related to liquidity and market capitalization, and one of the important developments to increase the attractiveness of the stock market was the enactment of the Foreign Investment Law, which allowed a foreign investor to establish and own 100 percent of companies in general, and such incentives for investors contribute to an increase in the amount of securities available for trading according to the classification of evaluation institutions that take into account the percentage of investments available to all without restrictions as to nationality or any restrictions that determine the investors authorized to own them, so therefore, the majority of listed companies are successively subject to the abolition of the upper limit of foreign ownership and the abolition of restrictions on foreign ownership by investors paving the way Foreigners of the stock exchange pass standards related to ease of investment and openness to foreign investors, thus effectively contributing to increasing the attractiveness of the stock exchange for international investors and directing their investments towards a smooth and flexible environment that has all the ingredients to develop your investments. At the same time, many efforts and initiatives continue to raise liquidity levels and find more listings. The upcoming Omani Investment Authority listings in the coming months are expected to contribute to increasing the depth of the stock market, opening up more investment areas and diversifying investments, especially as one of the Investment Authority’s IPOs is expected to be in the oil sector, which represents a heavyweight, it is important in the economy and has been absent from the public until now. quotations on the Stock Exchange in Muscat. The exchange also signed an agreement to study and develop stock exchange development initiatives and develop plans aimed at improving stock market participation in advancing economic development in line with Oman’s Vision 2040. Muscat Stock Exchange aims to increase participation in IPOs, diversify capital market solutions and encourage investment and facilitate investors to achieve market improvement and strive for the Omani capital market to be a major player in economic development in the Sultanate by expanding market depth and increasing liquidity, increasing market value and creating an investment environment that will improve the primary market and encourage the inflow of domestic and foreign investments.

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