annual report 2017 - capital market authority, sultanate

ANNUAL REPORT

2017

His Majesty Sultan Qaboos bin Said

Key Facts from 2017

Chairman’s Statement

Executive President’s Statement

Board of Directors

CMA: Establishment & Regulated Entities

Vision

Mission

Objectives

Strategic Priorities

Capital Market Performance 2017

Primary Market

Secondary Market

Insurance Market Performance 2017

Regulatory Framework

Training & Qualification

Organizational Structure & Contact Details

Appendices

06

08

12

16

19

20

21

22

23

25

25

33

45

57

73

77

81

Contents

76 ANNUAL REPORT 2017Capital Market Authority

ANNUAL REPORT 2017Capital Market Authority

CAPITAL MARKET SECTOR INSURANCE SECTOR

KEY FACTS 2017

Insurance sector’s contribution to GDP 1.63% in 2017 compared to 1.8% in 2016.

0.3% growth in gross insurance premiums and RO 451.57 total underwritten premiums in 2017

4% growth in the number of insurance policies issued in 2017

57% retention ratio of insurance companies in 2017

Takaful ratio 10.13% of the gross direct premiums in 2017. Takaful grew by 9%.

164 licenses granted by CMA to insurance companies and brokers in 2017

Branches of insurance companies were 169 in the various Governorates of Oman in 2017.

Omanization ratio in the insurance sector was 66% in 2017

Investigation in 455 official complaints in addition to a number of non-formal complaints which were resolved over the telephone.

The capital market provided RO 1.9 billion funding to the various businesses a 19% increase over 2016 distributed to the various investment sectors financial, services and industrial

The amount of bonds issued in the Sultanate about RO 782 million.

The Capital Market sector contributed 30% of Oman’s GDP in 2017 comprising the market capitalization of the companies listed on the regular, parallel and follow up markets.

Overall volume of capital market sector was RO 17.95 billion a 3.8% increase over 2016.

Audited financial statements of the year 2017 indicate total net realized profits of MSM listed companies dropped by 17% compared to net profits of 2016 from RO 763 million to RO 633 million. The fall was expected.

MSM is investment attractive based on P/E ratio. P/E ratio at the end of 2017 was 12.3

Omanization ratio in the companies operating in the field of securities 63%.



HE Yahya Said Abdullah Al JabriChairman of the Board Directors

Statement of the Chairman

The Capital Market Authority continued its drive to upgrade

the capital and insurance markets and create attractive, fair and

transparent investment environment to secure protection for

all the participants of Muscat Securities Market and insurance

market.

In 2017, a number of projects and decisions, that aim to

consolidate the readiness of the regulatory and supervisory

environment of both the capital and insurance markets, have

been approved to address the requirements brought into the

scene by the economic development. Consequently, the financial

services sector will be able to play a vital role supporting

bringing diverse sources into the economy through attracting

investment initiatives and improving productivity of securities

issuers on one side. On the other side, the insurance sector will

be in a position to provide insurance services suitable to cater

for a safe environment for individual and intuitional projects.

The Omani capital market provided funding at more than RO

1.9 billion in 2017. This reflects the role of the stock market

in stimulating the movement of the national economy and

thrusting the wheel of the comprehensive development. This is

an evidence to the market’s ability to deliver the financing needs

and contribute in expanding the businesses of the private sector

and creating promising production and services undertakings.

This is also a sign that the market can help attain the desired

economic diversification and enhance the contribution of the

private sector in creating employment opportunities for the

national cadres.

From a regulatory perspective, the CMA’s endeavors in 2017

were visible. One if the key regulations endorsed in 2017 was that



of the Real Estate Investment Trust (REITs) which is constructive

move toward triggering significant financing instrument that

would open the prospects for the regulation of the real estate

market and enhance the participation of individuals to avail the

real estate opportunities in the Sultanate. The year also witnessed

a number of amendments to the Executive Regulation of the

Capital Market Law. New directives for the conversion of public

joint stock companies focusing, mainly, on setting out controls to

protect retail investors and creating consensual mechanism for

the conversion have been adopted.

On the transformations of the Omani capital market, the Board

of Directors of the CMA has sanctioned the scheme for the

conversion of Muscat Securities Market into a company wholly

owned by the State Reserve Fund, which represents a new era in

the evolvement of the sector for further autonomy for the market.

CMA would be able to exercise its supervisory and regulatory

roles besides coping with the global trends toward privatization

of stock markets and conversion into companies to bolster the

impendence of the supervisors of securities markets.

With regard to the role of CMA in upgrading the legislative

infrastructure of the insurance sector in line with its growth

and expansion prospects in the products, we are proud of the

standards of readiness of the Omani insurance market. The

year 2017 witnessed 16% growth in the capital of the insurance

companies placing them in strong financial position enabling

them to take greater levels of risks as well as increasing ratios of

retention in the Omani market. This progress was the outcome

of the amendments to the Insurance Companies Law enacted

by Royal Decree No. 39/2014 with the aim of enhancing the

financial advantage of the companies by raising the minimum

limit of the capital to RO 10 Million. The decision to obligate the

national insurance companies to transform into public joint stock

companies beside the merger processes are deemed steps in

the right path to create larger and stronger entities able to

encounter the risks and accommodate the requirements of the

upcoming phase. The year 2017 also witnessed the issuance of

a number of processes and decisions including regulations and

approval of insurance products.

In order to cope with the developments in the insurance sector

the CMA continued its efforts to assess and review the regulations

and to issue the directives suitable for such developments. CMA

commenced in 2017 a process for the implementation of the

mandatory health insurance on the employees of the private

sector and the expatriates and visitors of Oman in collaboration

with the concerned entities in accordance with the instructions

of the Council of Ministers. To this end, the CMA established

the Health Insurance Supervision Department to take over the

execution and follow up of implementation of health insurance

scheme and to coordinate with the relevant stakeholders.

I must commend the great role CMA has played in the “Tamkeen”

Initiative with the aim of achieving qualitative Omanization

policy based on empowering the national cadres working for the

insurance sector in collaboration with the Ministry of Manpower

by focusing on boosting the representation of the national cadres

in the senior and medium roles alongside operational roles. CMA

attaches great importance to offering training programs to

enhance the aptitudes of the youth to acquire the skills required

to realize the CMA’s endeavor of enabling the national cadres.

To conclude, I would like to praise the role of the executive

management and all the staff of CMA for their diligent efforts,

praying to Allah to maintain the peace and security for this nation

under the wise leadership of His Majesty Sultan Qaboos bin Said,

may Allah Protect him.



H.E. Abdullah bin Salim Al Salmi Executive President

Executive President’sStatement

The importance of capital markets in the modern economies is

well known as an instrument for mobilizing capital and acting

as conduit between the various components of the economy

for capital formation, wealth creation and maximization to

contribute to the economic development. Hence, many nations

attach great importance to such markets, their supervision and

regulation to ensure soundness, fairness, efficiency, transparency,

integrity and professionalism of market participants through

setting up regulatory frameworks to control the practices to

ensure their fairness, to avoid systemic risks and to mitigate

unreasonable volatility in such markets. Thus, the Capital Market

Authority (CMA) was established to supervise and regulate the

capital and insurance sectors.

Since its inception, CMA endeavors to cope with the global

regulatory developments in an attempt to advance these sectors

to the globally recognized levels to augment the confidence

of local and international investors to ensure continuation of

the advancement of the institutions of these sectors, diversify

their products and involving largest number of participants for

greater added economic value to the national economy.

The 2017 data suggests the market, despite the economic

challenge and financial implications of the oil crisis, was able

to provide funding for economic project at RO 1.9 billion a 19%

increase from 2016, distributed on the different investment

areas in the financial, services and industrial sectors. The

amount of shares issues was RO 1 billion, the bonds issued

in Oman were about RO 782 million and RO 45 million for

Sukuk issuances. The overall volume of the capital market

was RO 17.95 billion at 3.8% upsurge compared to 2016 from



RO 763 million to RO 633 million as per the data of the financial

year 2017. MSM is considered attractive for investors based

on Price/earning- ratio at the end of 2017 a P/E ratio of 12.

Omanization ratio in the companies operating in the field of

securities was 63%.

Given the economic data the market is anticipated to continue

providing funding the national economy especially with the

economic diversification policies adopted by the government,

acceleration of privatization programmes, offerings of the

shares of insurance companies, government and corporate

Sukuk issues and new expected products such as units of

investment funds in general and real estate investment/trust

funds in particular coupled with the growing role of the private

sector in the economic activities.

The insurance sector had considerable share in the achievements

of CMA. The sector’s contribution to the GDP was 1.63% in 2017,

gross direct premiums grew by 0.3%. Underwritten premiums

were RO 451.57 million. The number of insurance policies issued

during 2017 grew by 4%. Retention ratio of insurers was 57%. The

ratio of Takaful to the gross direct premiums of the insurance

companies was 10.13% a 9% growth.

In the legislative aspect the efforts of CMA culminated in

issuing regulations, directives and decisions the key are the

amendments of the Executive Regulation of the Capital Market

Law with regard to the activities of the licensed companies,

the companies operating in the field of securities, the rules

for conversion of public joint stock companies beside the

amendments of certain provisions of the Rules for Selling

the Securities the Customer fails to pay their amount, the

provisions of the Clearing and Settlement Regulation in

addition to the issuance of the Regulation for Insurance Brokers

and the Directives for Licensing the Business of Valuation of

the Vehicles Cancelled consequent to accident.

CMA will continue in the coming year developing new laws and

regulations appropriate for the realities of the market to upgrade

the standards of performance of the capital and insurance

markets to increase their contributions to the Sultanate’s

GDP. CMA will also endeavor to enhance the standards of

transparency, integrity and fairness to furnish more protection

for investors in particular and market participants in general.

Finally, I would like to avail this opportunity to extend my

sincere thanks and appreciation to the Board of Directors of

the Capital Market Authority for all the support they provide

and to my colleagues in the CMA for their efforts, dedication

and loyalty in enhancing the work environment. I would also

like to extend my thanks to all our partners in the capital market

and insurance sectors for their continued cooperation and

communication which had constructive impact in achieving the

desired objects. I trust all will save no efforts to provide every

possible support to CMA’s endeavors for the best to achieve the

aspirations of the Government of His Majesty Sultan Qaboos bin

Said May Allah protect him.



H.E. Abdullah bin Salim Al SalmiChief Executive Officer

H.E. Yahya bin Said Al JabriChairman

H.E Sh. Dr. Abdul Malik bin Abdullah Al-HinaiVice Chairman

Mr. Ahmed bin Saleh Al-MarhoonMember

Mr. Khamis bin Abdullah Al FarsiMember

Mr. Hamdan bin Said Al DurieMember

Mrs. Farah bint Abdullah bin Musa Abdulrahman

Member

Mr. Abdul Razak bin Ali IssaMember

Board of Directors

Mr. Malik bin Abdullah bin Said Al Mahrooqi

Member



Objectives

visiOncMA PrOfile

Mis

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yKeep evolving

cMA PrOfileThe Capital Market Authority was established by Royal Decree No. 80/98 on 9th November 1998. It is a government entity that enjoys juristic personality, financial and administrative independ-ence and assumes the following functions and duties:

• SupervisingMuscatSecuritiesMarket

• SupervisingMuscatClearanceandDepositoryCompany.

• Licensing,supervisionandregulationof:

- Public joint stock companies

- Companies operating in securities.

- Insurance companies and brokers

- Credit rating companies.

• Developingthecapitalmarketandinsurancesectorsthroughconducting studies and setting out laws and regulations in line with the best international practices.

• Enforcementofthelawsunderitsjurisdiction.



visiOnThe vision of the CMA is for the Oman financial market to deliver diversified economic growth for Oman through: improved investment in, and performance and productivity of, issuers; the generation of efficient returns for savers, investors and users of financial market products; growth in market participation and inclusion. The goals of this vision are to:

1. Facilitate the Government’s drive to deliver sustained, diversified economic growth and to increase employment levels in the Sultanate.

2. Foster continuous development of the domestic financial market to ensure it is meeting the needs and improving the performance of investors and companies in the Sultanate, and beyond.

3. Protect investors and other participants by promoting fair, open, and efficient markets, and by ensuring full and timely disclosure of material information.

4. Maintain financial system stability, including through appropriate, transparent and predictable regulation, licensing, and supervision of market participants.

MissiOnThe goals of this mission are to:

1. Promote and expand informed participation in the capital and insurance markets, and other financial markets we may develop and regulate.

2. Regulate, monitor and supervise the issue and trading of securities and insurance, including full disclosure of material information regarding securities, insurance, and related transactions, to the public.

3. Achieve fairness, efficiency, and transparency in securities and insurance transactions.

4. Implement measures to reduce systemic risks related to securities and insurance.

5. Develop and improve the securities and Insurance markets, including transactions on and off the exchange.

6. License, regulate, monitor, and supervise the activities of entities subject to its control and supervision.

7. Develop and improve organizations and entities trading in securities and offering insurance.

8. Protect the public and investors from unfair and unsound practices.

9. Monitor and investigate conduct that may constitute a breach of CMA rules and regulations, and conduct enquiries into any matter relating to the financial markets and activities of participants.

10. Enforce rules and regulations, and sanction breaches.

11. Conduct all our actions and exercise our powers fairly, consistently, and proportionately.

“The Oman Financial Market will become an engine for sustainable economic growth and wealth creation.”

“Developing and promoting informed, efficient and effective markets & participation”.



ObjectivesOur actions and measures lead to fair, high quality, growing and sustainable markets As a result of the work we do, we aim to have the following impacts on financial markets:

1. Investors understand, and have confidence and trust, in the regulation and functioning of the financial markets, and have confidence in financial advisors

2. Financial markets are efficient, fair, and clean.

3. Financial markets are resilient, attractive, growing, and offer a range of quality and beneficial products and services.

4. Investors have access to understandable information they need to make informed decisions.

5. Financial markets participants have clear and well-understood responsibilities, and act responsibly and properly towards all counter-parties.

6. The costs and benefits of the regulatory regime are proportionate

7. Risks to the CML and CMA›s objective are identified, and suitable responses implemented.

8. Financial markets are growing faster than GDP.

9. Financial markets are contributing economic value to the Sultanate.

the cMA’s strAtegic PriOrities

cMA hAsseven

strAtegic PriOrities

Improvement of the capabilities of CMA’s units, staff, equipment and systems, and simplification

of procedures and processes.

Awareness of investors about their

responsibilities and duties towards investing

in the capital market.

Building and enhancing investors’

trust in the market & financial

intermediaries.

Preparation for the introduction of more attractive and high quality market products.

Continuous efforts to exploit feasible opportunities and invest in them.

Provision of best ways for investors to access the information they require.

Expansion of the insurance sector and

work to distribute insurance products

broadly.

Capital Market Performance:

Primary Market

CAPITAL MARKET AUTHORITYP.O. Box: 3359, PC:112, RuwiSultanate of OmanTel.: +968 24823100

cma.omcmaomancmaoman

[email protected]



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2017

1,904

1,595

2,565

907

1,168

2016201520142013

Global Oil Markets Performance

Owning to the dependence of most GCC states on oil proceeds as main commodity to finance their development projects, positive oil proceeds have always constructive impact on the performance of the GCC stock exchanges and the macro economy in general .

Performance results for 2017 show improvement in the oil market with a rise in the prices for the second consecutive year, though the rise was more sluggish than 2016. Oil prices moved within a limited range and witnessed minor fluctuations to stabilize over US$ 60/barrel after the extension of supply cuts agreement between the OPEC and non OPEC producers . Oil prices were US$ 64.5/barrel for OPEC crudes which increased by 21% compared to 2016. Likewise, Brent crude spot contracts were US%66.7/barrel during 2017 compared to US$ 55/barrel in 2016 a 21.4% growth (KAMCO Research 2017).

Contribution of the Capital Market Sector in the National Economy

The function of the capital market in the national economy is to mobilize and channel funds from accumulated savings into investments in new projects to attain economic and social growth for the benefit of the various vital sectors of the economy including the financial, services and industrial sectors. Moreover, the capital market with its state of the art technologies and robust legislations is able to provide attractive investment environment that contributed to the growth of the market value of the listed companies and consequently augmenting the levels of local and foreign investments therein.

1. Funding Provided by Stock Market in 2017

The capital market is one of the key components of the financial sector and important support for the comprehensive development through provision of cost effective funding options compared to other sources of funding. The sector played, since its inception, a vital role in providing funding at the required volumes which contributed to enhancing the rates of growth of the local economy. In 2017 the sector provided to the local economy funding at RO 1.9 billion a 19% increase over 2016 distributed among the various investment areas in the financial, services and industrial sectors.

Figure (1) Oil prices movement 2017

Source: Blooberg IEA

Figure (2) Net new funding 2013-2017 (RO Million)



2017

2015

17.95

Total

17.29

15.78

2014

2013

14.57

11.67

2016

2. Market Capitalization of the MSM listed companies

Market Capitalization is a key indicator reflecting the performance and growth of the capital market sector and is considered an important indicator of the role of the sector in enhancing the economic growth. The results of 2017 closings indicate the overall volume of the capital market sector was RO 17.95 billion increasing by 3.8% compared to 2016. Public joint stock companies comprised 45% of the total market capitalization closed companies 40% and Bonds & Sukuks 15% during the year. Market capitalization was 30% of the GDP in 2017. Market capitalization includes the regular market, parallel market and follow up market.

Figure (3): Market Capitalization (RO Billion) during the period 2013-2017

Primary Market and Corporate Actions The primary market is deemed one of key sources of funding of the capital market. It plays a remarkable role in pooling and channeling the savings in the economic cycle and increasing them which leads to increasing the standards of living of investors in the stock market and contribute to wealth distribution among a large number of the community members. The market has effects on the performance of the secondary market as it is supposed to attract new contributors to the secondary market and eventually creates trading activity in the listed securities. The year 2017 witnessed remarkable activity in the number of transactions and proceeds from issues through the primary market both on the global and regional arenas which had impact on the local performance too.

1. Locally

On the local level the year 2017 witnessed the return of initial public offerings after an absence in 2016 due to the sharp fall in oil prices and the accompanied concerns and uncertainties about the prospects of growth of the global economy. The primary market saw considerable and outstanding increase in the value and number of issues approved by CMA. CMA approved 13 issues at RO 603 million of which RO 392 were offered. In the shares issues five public offerings were approved at RO 43 four of which were issues of insurance companies and one was the offering of 35% of Muscat City Desalination Company. Two rights issues were offered at RO 45 million. The Bonds and Sukuk market witnessed 4 government bonds issues (Issues 52 to 55) , five corporate issues and one bonds issue in the closed market and one Sukuk at a total value of RO 827 million. One investment fund was registered in 2017.

Financing methods were diverse during the year comprising bonus shares, rights issues and private placements to enhance the capital of the companies to enable expansion of investment operations and hence increase proceeds diversification opportunities. Subscription proceeds were distributed equally between public joint stock companies and closed joint stock companies as the table below shows:

Figure (4) Total market capitalization of MSM (RO Billion) 2013-2017

Public joint stock company Bonds and SukukClosed joint stock company

8.18

8.94

8.53

9.13

9.46

7.14

6.36

5.38

4.04

3.58

2.63

1.99

1.87

1.22

1.12

20172016201520142013

17.95017.288

15.77914.565

11.665

Value

Years



2. GCC

Although 2017 was not a positive year as regards the overall growth of the GCC economies, however the performance with respect to initial public offerings was different with extensive activity in 2017 to reach its highest levels in three years. Total number of initial public offerings in the GCC states in 2017 was 25 including 5 real estate investment funds compared to 4 initial offerings in 2016 and six initial offerings in 2015. About US$ 3.2 billion were raised from the new offerings in 2017 compared to US$ 700 million in 2016 more than 350% increase. The United Arab Emirates topped the GCC markets as regards the proceeds of initial public offerings with 70% of the total proceeds. The Saudi market maintained its leading positon in terms of the number of offerings with 16 offerings in 2017 compared to 3 in 2016.

3. Global Markets

The number of IPOs have increased by 49% on annual basis in 2017 to 1624 issues compared to 1093 in 2016. The primary market’s activity reached the crest in 2017 recording the highest number of offerings since 2007. The proceeds of offerings increased by 40% on annual basis from US$ 134.5 billion in 2016 to US$ 188.8 billion in 2017.

As to the regional participation the Asia Pacific region crowned the global activity in terms of the number of dealings and proceeds in 2017 securing 58% of deals and 35% of proceeds.

The US primary market experienced increasing activities as the number of IPOs in NYSE and NASDAQ rose by 55% in 2017. The proceeds also increased by 84% on annual basis at US$ 39.5 billion compared to 2016.

Table (1) Corporate actions for both public and closed companies (2017)

Public Joint Stock Companies

Type of Listing RO Number of Securities

Rights Issue 45,100,000 266,216,216

Bonus Shares 72,129,800 676,298,002

Bonds converted to shares 18,541,826 185,418,256

New issues (shares) 43,065,346 195,692,640

New issues (government bonds) 600,000,000 6,000,000

New issues (corporate bonds and Sukuk) 197,001,208 116,137,383

Total 975,838,180 1,445,762,497

Closed Joint Stock Companies

Type of Listing RO Number of Securities

Rights Issue 122,123,600 153,873,600

Bonus Shares 433,154,656 442,154,656

Bonds converted to shares 218,271,892 218,271,892

New issues (shares) 158,658,437 326,072,837

New issues (corporate bonds and Sukuk) 30,000,000 30,000,000

Total 962,208,585 1,170,372,985

Total Listed 2017

RO Number of shares

Public 975,838,180 1,445,762,497

Closed 962,208,585 1,170,372,985

Total 1,938,046,765 2,616,135,482

Total Capital Reduction 2017

RO Number of shares

Closed 10,493,319 10,493,319

22

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

25

12 119 999

17

64

Figure (5) Number of IPOs in the GCC States during the period 2007-2017

Source: Ernest & Young & KAMCO Investment Research

Source: Reuters, Bloomberg & KAMCO Investment Research

Capital Market Performance:

Secondary Market



[email protected]



Stock Markets Performance: Local, GCC and Global

Muscat Securities Market

MSM30 dropped by 12% at the end of 2017 compared to 2016 closing at 5099.28 points. Four billion shares changed hands at a total value of RO 992 million. Market capitalization was RO 17.9 million at the end of the year. Although the sell side dominated the dealings of foreign non GCC investors, however, the ratio of foreign investments maintained their previous levels at the end of 2016 with slight increase of not more than 1% with active Omani participation on the buy side during the year.

11.82%(683.43)

992٫716٫692

Total value of trading in rials

Securities traded

Muscat Securities Market

www.msm.gov.om

227522

87.8%

79.6%

6.1%

10.8%

5.3%

8.8%

0.7%

0.7%

4٫275٫593٫467Billion

17٫950٫843٫395.23Billion Rial

5,099.22

Number of traded securities

Total market value

Purchase ratio by nationality

Percentage of sale by nationality

2017

2016

6,200.00

6,000.00

5,800.00

5,600.00

5,400.00

5,200.00

5,000.00

4,800.00

4,600.00

4,400.00JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Figure (2) MSM 30 Monthly closings 2016-2017

Table (1) MSM performance indicators during 2016-2017

Year MSM 30 index

Number of tradedshares

Amount of traded

shares(OMR)

Number of traded

bonds and

Sukuk

Amount of traded

bonds and Sukuk

(OMR)

Number of transa-

ctions

Total number of securities

Total Traded amount (OMR)

Market capitali-zation (OMR billion)

2016 5,782.71 4,540,986,403 945,458,015 92,370,953 13,411,387 201,106 4,633,357,356 958,869,403 17,288.12

2017 5,099.28 4,263,993,120 916,601,051 11,600,347 76,115,641 163,115,641 4,275,593,467 992,716,692 17,950.84

Change -11.82% -6.10% -3.05% -87.44% 467.54% -18.47% -7.72% 3.53% 3.83%

Most performance indices of the market were mainly negative compared to the same period of the previous year. Total number of traded securities fell by 8% compared to the past year due to the sharp fall in the number of traded bonds and Sukuk which fell sharply by more than 87% which is the highest among all the other indices.

Traded shares also plummeted in both the number and value by 6% and 3% consecutively followed by the number of transactions which fell by 18% while total traded value increased by 3.5% reinforced by trading in the bond and Sukuk market. Market capitalization increased by about 4% compared to the previous at RO 0.67 billion to RO 17.95 billion.

Trading Data for 2017 at Muscat Security Market

Figure (1) Summary of performance during 2017



Figure (3) 2017 Monthly change in MSM Closings

The year 2017 was not a sound year for the performance of the Secondary Market as the above figure suggests unlike 2016 in which the performance was far better. MSM index witnessed a number of volatilities driven by the instability in the oil prices beside a number of other economic and geopolitical events in the region in the past months. Despite the index’s attempts to maintain its rising trail in 2016 its performance tumbled after the end of the first quarter and continued to descent until it reached the lowest point in the last quarter of year to 4978.780 points in October and wrestled to increase in the last two months of 2017 by scoring higher closings than the lowest point and closed the year at 5.099.28 points.

Foreign Investment Movement in the Omani Stock Market

Foreign investment continued the exit trend from 2015 to mid-2017 when it reached its lowest level over the past four years at 27.16%, thereafter, the foreign investments ratios witnessed cautious upward trend led specifically by GCC investments until the end of 2017 closing at 28.07% with slight growth of less than 1% over 2016 which closed at 27.83%.

Generally, foreign purchases during the year were 12.15% against sellings at 20.33% with net selling at RO 81.209 million in 2017. These selling pressures were absorbed by local institutional investments. The figure below shows the changes in foreign investments on monthly basis in 2017:

Accordingly, all sectorial indices of the market were affected by different levels. Services index led the decline trend by 13.6% at 2643.43 points followed by the Industry Index by 7.8% at 6833.39 points and then the Financial index by 2.6% at 7474.16 points. MSM Sharia complaint index closed the year at 713.64 points falling by 17.9%.

13.8

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Janu

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Monthly Change (%)

of the Total

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ch

Ap

ril

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June

July

Ag

eist

Sep

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ob

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0.47 -0.36

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13.3

4

Figure (4) 2017 Non-Omani Investments

GCC (%) Foreign (%) Total (%)

3.0%

2.0%

1.0%

0.0%

-1.0%

-2.0%

-3.0%

-4.0%

-5.0%

-6.0%

-0.1% -0.7%-1.7% -1.8%

-2.5%

-0.2%

-5.6%-4.0%

0.1%

0.6%

1.7%

2.0%

JAN

FEB

MAR APR MAY JUN JUL

AUG SEP

OCT

NOV

DEC



2015

2016

2017

716

763

633

Figure (5) Holdings by nationality as at the end of 2017 Figure (6) Net profits of listed companies in 2017 (RO Million)

Figure (7) Total Payouts (Million)

Holdings by Sector

Most of the Omani holdings were concentrated in the shares of the financial sector at 60.6% of their total investments in the market followed by the services sector at 28.6% and the industry sector at 10.8%. The financial sector attracted the GCC and Arab investors who invested 58% and 52% consecutively in the sector. Foreigners’ contribution in the financial and services sector was 48% and 45% consecutively. The industry sector was the lowest in holdings among the sectors.

Total Net Profits of Listed Companies in 2017 and Cash and Stock Dividends

Audited financial statements of the year 2017 indicate total net realized profits of MSM listed companies dropped by 17% compared to net profits of 2016 from RO 763 million to RO 633 million. The fall was expected as a result of the rise in income tax due to the amendments of income tax law at the beginning of 2017, in addition to increased royalties on telecommunications companies further to the recession of the global economy in general and the Omani economy in particular. The industry sector was the most impacted declining by 60% on annual level followed by investment companies’ sector and the service sector by 40% and 30% consecutively.

Dividends table suggests 59 listed companies have adopted, in their general meetings, cash payouts and stock dividends to investors for the financial year 2017. Cash dividends were RO 367 million. Thirteen companies adopted stock dividends in addition to cash payouts at 760 million bonus shares at nominal value 100 Baisas per share for the shareholders of record on the date of the general meeting. The following table shows comparisons of dividends in the years 2016 and 2017. The figures indicate the listed companies tended to stock dividends in 2017 more than 2016 as alternative for the decline in the net realized profits experienced by most listed companies during the year.

Omanis ArabsForeigners GCC

Cash payouts (RO)

Stock dividends (shares)

0.20%

72.12%

13.5%

14.63%

20162017

367

760676442



Causes of Deterioration in the Overall Performance of Listed Companies

The Decline of the overall performance of all the indices of MSM , foreign investment indices, financial results indices and the falling cash dividends is attributed to a number of factors including the impact on the results of the companies during the first quarter of the year caused by implementation of the tax increase as a result of the amendments of the income tax law and the uncertainties that marred its extension to dividends, foreign investors’ concerns resulting in sell off pressures in addition to the rise of royalties on telecommunication companies in which foreign investors hold high percentages. Moreover, unfavorable international reports and reduced ratings of a number of counties in the region contributed to the decline. Further to such internal factors there were external factors mainly embodied in the geopolitical turmoil in the region with the crisis in Yemen and Qatar, the pressures on the profits of the related companies and exit of highly sensitive institutional foreign investments.

Overview of Performance of GCC, Arab and Global Markets

The end of 2017 witnessed mixed closings for GCC stock markets. Three indices closed on uptick and four on downtick compared to 2016. Most GCC stock markets were affected by regional geopolitical concerns that impacted the flow of international funds and affected local investments too. The Qatari stock market was the most affected declining by 18.3% ,its lowest performance since 2008 as backlash of the diplomatic crisis and severing political and commercial relationships between Qatar and the majority of the GCC states followed by MSM with 12% decline, then Dubai and Abu Dhabi stock exchanges by 4.6% and 3.3% consecutively.

Kuwait Stock Exchange was on top of the uptick list in 2017. Its price index rose by 11.48% to 6408.01 points thanks to its accession to FTSE Russell Emerging Market Index followed by Bahrain Stock Exchange by 7% and lastly Saudi Stock Exchange by 0.2% rise over the year.

Table (2) 2017 Annual Performance of GCC and Arab Stock Markets

Stock Exchange 2016 Closing 2017 Closing Annual Change

(YTD)

Best Performers

Egyptian Exchange 12,344.89 15,019.14 21.66%

Tunis Stock Exchange 5,488.77 6,281.83 14.45%

Palestine Exchange 511.77 574.58 12.27%

Kuwait Stock Exchange 5,748.09 6,408.01 11.48%

Bahrain Bourse 2,204.51 1,331.71 9.12%

Casablanca Stock Exchange 11,644.22 12,388.82 6.39%

Saudi Stock Exchange (Tadawul) 7,210.43 7,226.32 0.22%

Worst Performers

Qatar Stock Exchange 10,436.76 8,523.38 -18.33%

Muscat Securities Market 5782.71 5,099.28 -11.82%

Beirut Stock Exchange 1,212.73 1,148.57 -5.29%

Dubai Financial Market 3,530.88 3,370.07 -455%

Abu Dhabi Securities Market 4398.44 -3.25%

Amman Bourse 2,170.29 2,126.78 -2.00%

Arab stock markets generally performed well led by the Egyptian Exchange the leading Arab stock exchange with more than 21% growth followed by Tunis Stock Exchange by 14% and Palestine by 12%. The index of Beirut Stock Exchange shed 5% of its gains in 2016 and Amman Bourse index lost 2% of its gains.

On the global arena the emerging stock markets witnessed better annual performance in 2017 compared to the advanced markets and other types of assets recording 34.3% growth in the year. Morgan Stanly Developed Markets Index recorded 20.1% growth.

American indices recorded outstanding performance in 2017. Nasdaq increased by 28.3% , Dow Jones by 25% and about 19.4% for Standard & Poor’s.

European stock markets witnessed their best performance since 2013 thanks to the rise in technology and resources stocks. Milan stock exchange led the European markets with 13.6% gains. DAX Index rose 12.5% as second best European stock exchange while the French stock exchange increased by 9.2% and 7.6% for the London stock exchange.

In the emerging markets the Indian stock exchange realized gains at 27.9%, Brazil grew by 26.8%, South Korea 21.8%, China 21.8% and 19.9 % for Indonesia



Table (4) GCC Market Trading Volumes (US$ billion)

Market 2013 2014 2015 2016 2017

Saudi 365.2 572.0 442.9 314.4 226.4

Qatar 20.6 54.8 25.7 19.0 18.2

Kuwait 39.3 20.8 13.0 9.5 19.0

Muscat 5.9 5.8 3.6 2.5 2.6

Abu Dhabi 23.0 39.6 16.3 13.1 12.4

Dubai 43.5 94.5 41.0 36.5 31.2

Bahrain 0.60 0.71 0.29 0.32 0.55

Total 498.1 788.2 542.8 395.3 310.4

Source: Figures on GCC markets in 2017

As regards GCC P/E ratio MSM had attractive P/E ratio compared to the GCC Markets except Bahrain that recorded least P/E ratio during the year. Dubai’s P/E ratio was 16.5 which is the highest in GCC stock markets as the following table shows:

2017

15.6

16.5

12.3

9.0

13.0

12.7 12.7

2017 Key Market Indicators Reflecting Performance of GCC Indices

Trading volumes and Price/Earning ratio ( P/E ratio) are important indicators of the performance of the stock market. Pursuing historical performance of the GCC indices during the past 5 years shows that trading volumes reached the lowest levels in 2017 falling by 21% compared to the same period in the previous year. Trading volumes of GCC stock markets were US$ 310.4 billion at the end of 2017 compared to US$ 395.3 billion during the same term in 2016.

The Saudi market was the most plummeted in terms of trading volumes at 28% at the end of 2017 followed by Dubai by 15% to US$ 31.2 billion during 2017 compared to US$ 36.6 billion in the previous year as can be seen in the following table.

Saudi Abu Dhabi Dubai Muscat BahrainKuwaitQatar

28.24%

7.63%

-5.51%

25.08%

12.51%

27.91%

19.42%

9.26%

21.78%

13.61%

26.38%

19.99%

9.45%

25.11%

47.60%

26.86%

19.66%

American Markets

European Markets

Emerging Markets

Nasdaq

Dow Jones

Standard & Poor’s

Russia

Mumbai

China

Korea

Indonesia

Malaysia

Philippine

Turkey

Brazil

South Africa

FTSE

German DAX

French KAK

Milan

Annual Change (YTD)Name of Stock Market

Figure (8) Emerging and Global Markets YTD% 2017

Figure (9) P/E ratio for GCC markets in 2017

Source: Arqaam reports for GCC markets in 2017

Insurance Market Performance 2017



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Figure (2) Per capita insurance expenditure (RO) (2009-2017)

2010

2015

2015

2012

2012

2013

2013

2011

2011

2014

2014 2009

2017

2017

2016

2016

1.3%

1.1%1.1%1.1%1.2%1.3%

1.6%1.8%

1.63%

74.989.484.9

90.293.4

97.9

102.3100

97

Insurance Premiums

Change in Premiums

2009

2009

2011

2011

2013

2013

2015

2015

2010

2010

2012

2012

2014

2014

2016

2016

2017

2017

237.

83

14% 13%17%

10% 10% 11%2% 0.3%

4%

247.

85

279

.64

326

.81

359

.93

396

.52

44

2.0

8

450

.24

451

.57

Role of the Insurance sector in the national economy:

Contribution to the GDP of the Sultanate is about 1.63%

The insurance sector is considered one of the key contributors of the national economy for being closely related to other sectors and maintains the stability and continuity of the activities of such sectors. CMA is keen to stimulate the role of insurance in the Sultanate and boost its significance and relevance to the national economy through supervision and regulation. The 2017 audited financial statements indicate the contribution of sector in the GDP was 1.63% in 2017 compared to 1.8% in 2016.

Insurance premiums growth 0.3%.

Gross premiums RO 451.57 million in 2017

Gross direct premiums of insurance companies increased slightly to RO 451.57 million in 2017 compared to RO 450.24 million in 2016 . Direct gross premiums of general insurance have increased to RO 390.20 in 2017 compared to RO 382.62 million in 2016. Direct gross premiums of life insurance have decreased to RO 61.37 million in 2017 compared to RO 67.62 million in 2016.

Figure (1) Ratio of insurance premiums to the Sultanate’s GDP

Figure (3) Gross direct premiums and rate of change during the period 2009-2017

Figure (4) shows motor insurance branch demonstrates the highest percentage of the gross premiums at 36% less than 2016 which was 37% followed by the health insurance at 32% higher than 2016 which was 30%.

2010 2009



4%

9%

2%3% 5%

9%

36%32%

4%

4%

15%

3%3%

35%

10%

26%

2016 2017

2016 2017

52.02 %55.05 %

70.10 %

66.23 %

56.53 %57.46 %

National Insurers Foreign insurers

Total Change

3.03 % -3.87 %

4% Growth number of insurance policies in the 2017

The number of insurance policies (general and life) have increased in 2017 by 4% to 1.72 million policies including 1.61 million general insurance policies and 0.11 million life insurance policies compared to a total number of policies in 2016 at 1.66 million including 1.55 million general insurance policies and 0.12 million life insurance policies.

Table (1) Total Number of insurance policies issued by insurance companies (million)**

InsurersGeneral insurance Life insurance Total

2016 2017 Change % 2016 2017 Change

% 2016 2017 Change%

National Insurers 1.25 1.37 9% 0.03 0.03 11% 1.28 1.40 9%

Foreign Insurers 0.29 0.24 -17% 0.09 0.08 -11% 0.38 0.32 -16%

Total 1.55 1.61 4% 0.12 0.11 -6% 1.66 1.72 4%

** Change in ratios from the past year due to mergers of insurers in 2017 namely Muscat Insurance and Muscat Life to Muscat

Insurance and Arabian Insurance and Falcon to Arabian Falcon

Figure (4) Distribution of Direct Premiums of Insurance Branches (total) in 2017

Figure (5) Retention Ratio of Insurance Companies by Type

Retention ratio: 2017 retention ratio of insurers in Oman 57%

Retention ratio in 2017 was 57.46% compared to 56.53% in 2016. Audited financial data indicates retention ratio for national insurance companies in 2017 was 55.05% compared to 52.02% in 2016. Retention ratio for foreign companies dropped from 70.1% in 2015 to 66.23% in 2017.

Takaful Insurance:

9% Growth of Takaful Premiums in the Sultanate

Gross direct premiums of Takaful companies in the Sultanate have increased by 9% to RO 45.76 million in 2017 compared to RO 42.06 million in 2016 representing 10.13%% of the gross direct premiums of the insurance companies. General Takaful business increased by 8% to RO 40.52 million compared to RO 37.68 million. General Takaful was 10.39% of the total general insurance of all the companies of the sector. Gross direct premiums of Takaful companies for family Takaful have increased by 20% to RO 5.24 million in 2017 compared to RO 4.38 million in 2016. Family Takaful was 8.54% of the total life insurance business of all the companies.

Marine

Property

Vehicles

Health

Marine

Property

Vehicles

Health

Life

Engineering

Liability

Other

Life

Engineering

Liability

Other



1

18.56%

10.71%

8.21%6.31%

18.53%

10.13%

20.00%18.00%16.00%14.00%12.00%10.00%8.00%6.00%4.00%2.00%0.00%

Table (2) Summary of Gross Direct Premium, Claims Paid and Number of Policies of Takaful Companies between 2016 and 2017

13

26

1 11 2 3 2 24

14

1 3

3 53 2

3 3Licensing insurance

agent

Renewal of licenses of

insurance agent

Opening branches

Licensing insurance

company (Merger)

Products

Renewal of license of

insurance broker

Licensing insurance

broker

Cancellation of insurance

agent

Shifting branches

Renewal of license of insurance

company

Cancellation of insurance

company

Appointments

Approval of Actuary

Change of Name

Insurance through banks

Approval of Advertise-

ment

Total 164

General Insurance of

Change %

Total%

Family Takaful of

Change %

Total%

Totalof

Change %

2016 2017 2016 2017 2016 2017 Perce-ntage

Gross Direct Premium

37.68 40.52 8% 10.39% 4.38 5.24 20% 8.54% 42.06 45.76 9% 10.13%

Total Paid Indemnities 18.54 54.14 192% 19.45% 2.08 2.37 14% 8.91% 20.62 56.51 174% 18.53%

Total Policies 0.10 0.10 -0.3% 6.35% 0.00 0.01 85% 5.62% 0.11 0.11 2% 6.31%

Total Commission and production cost

2.79 2.32 -17% 8.34% 0.40 0.28 -31% 7.27% 3.19 2.60 -19% 8.21%

Total General and Admini-strative Expenses

3.78 5.83 54% 10.16% 0.51 0.77 51% 18.12% 4.29 6.60 54% 10.71%

Total Assets 73.42 187.28 155% 23.54% 5.33 7.35 38% 2.90% 78.75 194.63 147% 18.56%

Total direct premiums

Total commission and production costs

Total administrative expenses

Total IndemnitiesTotal policies

Total assets

Figure (6): Direct premiums, indemnities, number of policies of Takaful companies to the total of insurance companies in 2017

164 actions related to regulation and licensing insurance institutions

The Insurance Unit has issued 164 approvals in 2017 (Figure 7) below



Training and Omanization in Insurance Sector

Training

The insurance unit continued in 2017 , with the sanction of CMA’s management, execution of Omanization policy coupled with training and qualification for the purpose of advancing the knowledge, capabilities and skills of national cadres to enable them to take the helm of the industry gradually through competence and efficiency. CMA’s policy is based on Omanization through enabling the national cadres working for insurance companies and brokers in the technical and administrative roles in the medium and senior levels rather than operational levels.

Twenty training programmes were executed with the participation of 468 employees of the insurance sector. The insurance sector unit organized CII certification programmes in the College of Banking and Financial Studies with the participation of 60 employees. After completion of FIT subject 34 employees passed the FIT and continued on FII (Level II).

Figure (8) 2017 Training Programmes

Omanization in the Insurance Sector

Table No. (3) shows that the number of the employees of the insurance companies, brokers and agents at the end of 2017 was 2914 of which 1930 were Omanis in the various technical and managerial roles in the insurance companies, brokers and agents comprising 66% of the employees of the sector. The number of Omani employees working for national companies is 57% of the total number of the employees of the sector. Omanization ratio in foreign insurance companies is 12% of the number of Omanis working in the insurance sector.

Total enrollment in training programs during the year 2017 - 468

Tamkeen Meeting 150

Risk Management 31

Internal Audit Skills 21

Claims Management& Settlement 33

Takaful Concepts and Applications 20

Investment in Training& Talent Management 30

Sales & MarketingSkills Development 29

Insurance BrokerageSkills 29

Executive Leadership 20

Administrative andTechnical Skills ofInsurance Agents 17

Underwriting Basics &Applications-Salalah 27

Innovation andCreative Thinking-Salalah 16

Excellence inCustomer Service 33

Motor Insurance 25

Underwriting Policies& Strategies“ Advanced” 21

Reinsurance &Applications 22

Non-life InsurancePricing 23

Financial Fraud inInsurance Contracts 21

Marine Insurance 18

CII Certification in collaboration withCBFS 32



63 36 64

7 2 6

22 4 5

3 11 0

11 9 10

17 3 15

22 6 26

7 6 5

7 5 7

6 0 8

4 4 1

169

86

147

Musandam Governorate

Al Buraimi Governorate

Dhofar Gov-ernorate

Insurance Companies

Insurance Brokers

Insurance agents

Al Wusta Governorate

TotalInsurance Institutions

South Sharqiyah Province

North Sharqiyah Province

Al-Dhahirah Governorate

Al-Dakhiliya Governorate

Muscat Governorate

Southern Batinah Governorate

North Batinah Governorate

Table (3) Number of Employees of Insurance Companies and Brokers

Number of Employees

2016 2017

Omani Expatriate Total Omani Expatriate TotalN

umb

er

% o

f to

tal

Num

ber

% o

f to

tal

Num

ber

% o

f to

tal

Num

ber

% o

f to

tal

Num

ber

% o

f to

tal

Num

ber

% o

f to

tal

National Insurance

Companies1079 58% 471 47% 1550 54% 1165 60% 497 51% 1662 57%

Foreign Insurance

Companies271 15% 119 12% 390 14% 239 12% 103 10% 342 12%

Insurance Brokers 339 18% 254 25% 593 21% 353 18% 236 24% 589 20%

Insurance Agent 171 9% 165 16% 336 12% 173 9% 148 15% 321 11%

Total 1860 65% 1009 35% 2869 100% 1930 66% 984 34% 2914 100%

Branches of Insurance Companies

The number of branches of insurance companies was 147 in 2017 dispersed in the various Governorate of the Sultanate . This eases access and reach to the customers, increases collected premiums, widens the customer base and results in increased insurance awareness in the community.

Figure (9) Distribution of insurance branches throughout the Sultanate during the year 2017

Regulatory Framework



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Regulatory Framework: CMA continues follow up of the developments in the capital market and insurance sector and amends the laws and regulations in line with the regional and global development taking into consideration the uniqueness of the Sultanate in a way preserving and protecting the rights of all the stakeholders in the capital market and insurance sector. The table below shows the key legislative developments in 2017:

Legislation Date of Issue

Amendment of the Executive Regulation of the Capital Market Law (ERCML) Licensed Companies Activities 17 May 2017

Issuance of Insurance Brokers Regulation 23 April 2017

Amendment of certain provisions of ERCML- Activity of the Company Operating in the Field of Securities

16 January 2017

Amendment of certain provisions for Selling the Securities the Client Failed to Pay their Value

17 May 2017

Amendment of certain provisions of the Clearing and Settlement Regulation 16 May 2017

Regulation for Marketing Insurance Products 24 October 2017

Rules for Conversion of Public Joint Stock Companies 28 August 2017

Directive for Licensing the Business of Valuation of Motor Vehicles Cancelled as a Result of Accident

5 November 2017

Real Estate Investment/Trust Funds 4 January 2018

Guarantee Fund For Persons Injured in Traffic Accidents 9 January 2018

Amendment of the ERCML- Real Estate Funds 4 January 2018

Source: Department of Legal Affairs and Enforcement

Regulatory Framework: – 2017 CMA Actions and Regulatory Decisions

The year 2017 witnessed a number of actions and interventions which resulted from our normal on-going regulatory assessments, monitoring, supervision and surveillance activities. The number of complaints received and investigated in 2017 were 455 complaints.

Regulatory interventions and decisions we made in 2017 including:

Compliance violations

Investment funds

Distressed companies

Capital IncreaseOther violations

New issues

Private placement

ProspectusesDisciplinary

decisions (warnings and sanctions and

penalties)

Licensing decisions and approvals

Decisions of grants and licenses

Disclosure violations

Complaints

Miscellaneous approvals

Capital reductions

Bonus shares

Figure (1) 2017 Legislative Developments

Figure (2) 2017 CMA Actions and Regulatory Decisions



CMA 2017 Regulatory Investigations and Interventions

The CMA supervises and regulates MSM, MCDC, public joint stock companies, the companies operating in the filed securities, investment funds, insurance companies, agents, brokers and credit rating companies. The tables below shows compliant and non-compliant companies in 2017

Figure (3) Listed Company Compliance with CMA Disclosure Provisions 2016 and 2017

Table (1) Listed companies defaulting on financial statement disclosure provisions 2017

Required Statements

Action

No

n-co

mp

liant

Dis

cont

inua

tio

n

Cau

tio

ning

Dir

ect

the

atte

ntio

n

Ref

erra

l to

enfo

rcem

ent/

Co

ncili

ato

n

Susp

end

sha

re

trad

ing

Und

er

cons

ider

atio

n

Dis

cip

linar

y D

ecis

ion

Disclosure of initial un-auditedannual results 5 1 4

Disclosure of audited annualfinancial statements 2 2

Disclosure of the resolutions of thegeneral meetings 2 1 1

Disclosure of the initial financialstatements of the first quarter 3 1 2

Disclosure of the unaudited financial statements of the firstquarter

3 1 1 1

Disclosure of the initial financialstatements of the second quarter 4 4

Disclosure of the unaudited financial statements of the secondquarter

3 1 1 1

Disclosure of the initial financialstatements of the third quarter 2 2

Disclosure of the unaudited financial statements of the thirdquarter

2 2

Disclosure of material information during trading or delay in disclosureof material news

4 1 1 2

Source: CMA Disclosure Department 2017

2017

CompliantIssue Non-compliant

106

109

106

106

104

105

109

109

*109

-

5

2

3

3

4

3

2

2

2

4

Note: Difference between quarters is due to increase in the number of listed companies and funds and conversion of certain companies to closed companies as well as differences in the financial years of the companies

*The figure shows the number of companies that disclosed the resolutions of the general meeting. Quorum was not present for two companies and the meeting was postponed to further notice and the same was disclosed on MSM website.

Unaudited initial annual results

Audited annual financial statement

First quarter initial financial statements

First quarter financial statements

Second quarter initial financial statements

Second quarter financial statements

Third quarter initial financial statements

Third quarter financial statements

Disclosure of the resolutions of the general meeting

Timely disclosure of material information



1/2017 Fine

Caut-ioning

Warning

Violation of the provisions of Unified Motor Vehicles Insurance

Policy

Violation of the provisions of Article 1 of Ministerial Decision

No. 26/86 and Article 3 of Insurance Agents Licencing

Requirements

Violation of Article 9 of Insurance Agents Licencing

Requirements

2/2017

6/2017

14/2/2017

11/7/2017

21/9/2017

International Cooperation

To enhance cooperation and communication between CMA and the external entities operating in the global and regional capital markets and insurance sector CMA was keen to conclude a number of memoranda of understanding in various fields such as exchange of information in the regulatory and supervision aspects to provide protection to investors and policyholders as well as exchange of views and cooperation in training and exchange of expertise, technical information and the information relating to the legislations of the capital market and insurance sector, cross border investment management, creation of financial products and activities in the field of investment management. In the year 2017 the following memoranda of understanding were concluded:

CMA 2017 Disciplinary Decisions

The CMA issued disciplinary decisions against 6 companies in 2017 issued by the Executive President including warning, cautioning, reconciliation and fine for 3 companies in the capital market sector and 3 in the insurance sector as can be seen in the table below.

Figure (4) Disciplinary Decisions in the Capital Market Sector 2017

Infringer

Infringer

Decision No.

Decision No.

Type

Type

Reasons

Reasons

Date of Decision

Date of Decision

Hotel Management Company International

Al Madina Takaful

Takaful Oman

Al Aman Al Mutamayizh Establishment - Insurance Agent

Dhofar International Development & Investment Holding

Price Water House Coopers

Warning

Warning

Warning

24/7/2017

25/7/2017

7/8/2017

3/2017

4/2017

5/2017

Violation of the provisions of Article 280 of the Executive Regulation of the Capital Market Law relating to

disclosure of the initial results of the first quarter

Violation of the provisions of Article 280 of the Executive Regulation of the Capital Market Law relating to

disclosure of the initial results of the first quarter

Violation of the provisions for practicing accounting and audit

profession

Figure (5) Disciplinary Decisions in Insurance Sector 2017

Source: CMA Department of Legal Affairs and Enforcement 2017



Open ended

Close ended

Public offering

Private placement

Unlisted

Listed

Shari’a compliant

18

16

14

12

10

8

6

4

2

0

18

6

1716

3

78

Figure (6) Memoranda of Understanding CMA concluded in 2016

CMA also participated in a number of meeting such as the 16th Meeting of the Chairpersons of GCC Securities Commissions in Manama, the 11th meeting of the Arab Association of Securities Commission in Tunis. The closed consultative meeting of the GCC Securities Commission in Riyadh, the annual meeting of the Islamic Financial Services Board and the 38th Meeting of the Africa and Middle East Regional Committee (AMERC).

The Companies Operating in the Field of Securities The number of the companies operating in the field of securities licensed by CMA at the end of 2017 was 36 companies including 17 companies carrying out brokerage business and 19 companies carrying out other than brokerage business. Three companies were licensed to practice in the field of securities in 2017 namely Al Izz Bank, Shimookh Investment Funds Management Company and Al Nawa Investment. Total licensed capital, minimum capital required to carry out various activities was RO 70.9 million Thirty Two companies are local companies and 4 are foreign. Omanization ratio in the companies was 63%.

Figure (7) The Companies Operating in the Field of Securities

Number of licensed companiesActivity name

17

19

17

16

17

14

11

9

8

4

1

0

11900000

3800000

3400000

3200000

3400000

2800000

2200000

27000000

8000000

4000000

200000

-

Minimum capital requirements

Brokerage

Issue Management

Research and Investment Advice

Marketing non-Omani Securities

Portfolio Management

Management of Investment Funds

Investment Manager

Custodian

Margin Financing

Issuer of Structured Instruments

Agent for Bondholders

Market Maker

Source: Department of Capital Market Institutions Audit and Regulation

Distressed Companies

CMS monitors distressed companies whose capital have eroded and ask them to take the required corporate action to adjust their situations. When the capital erosion reaches 75% CMA urges them to call for an extraordinary general meeting to discuss the distressed financial position to take the required action to improve the situation pursuant to the Commercial Companies Law. Below a list of distressed companies whose capital have eroded as per the audited financial statements as on 31/12/2017

Table (2) 2017 Distressed Companies

# Company name Capital 2017

Equity 2017

Equity to Capital (%)

Capital Erosion

(%)

1 Al Hassan Engineering 7,520,800 49,419,271 657.06% 757.1%

2 Abrasives Manufacturing company 1,000,000 1,997,067 199.71% 299.7%

3 First1 5,100,00 128,148 2.51% 97.5%

4 Omani Euro 2,000,000 77,775 3.89% 96.1

5 National Securities 2,000,000 249,869 12.49 87.5

6 Oman International Marketing 500,000 74,169 14.83% 85.2%

Investment Funds

Investment funds are collective investment schemes investing money from investors and manage in accordance with specific investment strategy and objects set out by the fund manager to achieve benefits the investor cannot attain alone in light of his limited resources. CMA regulates and supervise MSM listed and unlisted funds. The figure below shows the types of funds

Autoriti Monetari Brunei Darussalam January

Capital Market Authority of Lebanon March

Entity Date of signature

Source: Department of Media and External Relations 2017

Figure (8) Types of Investment Funds



Licenses and IssuesCMA approved in 2016 a number of licenses and issues including rights issues, private placement, capital increase, capital reduction and bonus shares as well as cancelled companies and the companies converted from public joint stock companies to closed joint stock companies as can been seen in the tables below:

Rights IssuesTable (3) 2017 Rights Issues

No. of Subscribed

Shares

Increase in capital (Rial)Listing Date Company Name

SAOG

50,000,0005,025,00021/9/2017Ahli Bank Rights Issue

216,216,21621,621,62212/10/2017Bank Dhofar Rights Issue

SAOC

4,620,0004,620,00026/1/2017Moon Iron & steel

11,000,00011,000,00026/2/2017Oman National Investment Development

14,592,00014,592,00013/3/2017Moon Iron & steel

9,958,0009,958,0006/4/2017Qurayyat Desalination

12,350,00012,350,00030/4/2017Oman Hospitality

4,005,0004,005,0004/5/2017Vision Insurance

7,000,0007,000,0006/5/2017Moon Iron & steel

1,500,0001,500,0009/7/2017AL Hassad Real Estate

3,100,0003,100,00010/7/2017Oman Development Fund Co.

200,000200,00017/7/2017Gulf custody

40,000,0004,000,00020/8/2017Oman Qatar Insurance

5,899,5005,899,50012/10/2017Omani Hospitality

7,000,0007,000,00014/11/2017Destinations Hotels Management

1,110,1001,110,10011/12/2017Oman Development Fund Co.

6,539,0006,539,00011/12/2017Musandam Power

25,000,00025,000,00025/12/2017Minerals Development Oman

4,250,0004,250,00026/12/2017Moon Iron & steel

Private Placement

Table (4) 2017 Private Placement

No. of Subscribed Shares

Increase in capital (Rial)

Listing Date Company Name

SAOC

981,764981,76419/1/2017Oman Porcelain

43,604,21943,604,21930/1/2017Mazoon Electricity

45,900,20045,990,2008/3/2017Oman Shipping Co.

3,935,7093,935,7099/4/2017Falcon Insurance

84,500,00084,500,00017/4/2017Majan Electricity

5,600,0005,600,00030/4/2017Al Khuwair Hospitality & Investment

13,000,00013,000,0001/5/2017Muscat National Development & Investment

750,000750,00031/5/2017Awasr Oman & Partners

20,000,00020,000,00028/12/2017Oman Air

Capital Increase

Table (5) 2017 Capital Increase

No. Increase Shares

Increase in capital (Rial)Listing Date Company Name

SAOG

88,299,0818,829,90826/3/2017Bank Muscat

8,927,133892,7132/5/2017Al Omaniya Financial Services

19,696,9671,969,6974/5/2017Bank Sohar

68,495,0756,849,5081/8/2017Renaissance Service

424221/9/2017Muscat Insurance



Capital ReductionTable (6) 2017 Capital Reduction

Reduction inCapital Listing Date Company Name

SAOC

3,693,31919/1/2017Oman Porcelain

1,500,0006/4/2017Oman Int’l Foods

5,300,0008/3/2017Global Omani Development & Investment Co.

New IssuesTable (7) 2017 New Issues

Reduction in Capital Listing Date Company Name

500,00012/1/2017Oman Charter

3,000,00016/2/2017Salalah Resorts

500,00022/2/2017Al Reef Real Estate

2,244,0507/3/2017Port of Duqm

500,00021/3/2017APL Logistics Oman

12,000,00027/3/2017UBHAR Capital

500,00030/3/2017Rural Areas Electricity

500,00030/3/2017Oman Water & Energy Procurement

500,0004/4/2017Oman Electricity Transmission

3,860,00018/4/2017Oman Iran Joint Investment

500,00030/4/2017Al Hassad Real Estate

11,000,0003/5/2017Mazoon Diary

4,048,7839/5/2017Al Shawamikh Oil Services

500,00018/5/2017Awasr Oman & Partners

500,00021/5/2017Oman Aviation Handling

100,177,01231/7/2017Oman Growth fund

500,00015/8/2017Oman Infrastructure Management

5,200,00019/9/2017Shrkt Alwajht Alwatnyt Litrfyh Walsyaht

500,00019/9/2017Takamul Hospitality & Investment

500,00026/9/2017Entertainment Network

500,0004/10/2017Action Hotels Int’l

2,500,00023/10/2017Mineral Development Oman

1,101,6005/11/2017Bawariq Nizwa Int’l Investment

3,027,00221/11/2017Oman Broadband

3,499,99020/12/2017Al Baraka Oil Field Services

Volume (RO) PriceListing DateCompany Name

SAOG

7,500,0000.317/8/2017Al Ahlia Insurance

4,050,0000.223/8/2017Vision Insurance

4,000,0000.219/10/2017Oman Qatar Insurance Co.

21,200,0000.36/12/2017National Life & general Insurance

Volume (RO)PriceListing DateCompany Name

Bonds and Sukuk

150,000,000100.023/2/2017Government Development Bonds 52

2,142,9080.15/4/2017Al Omaniya Financial Services Bonus Bonds


44,608,3001.013/6/2017Meethaq Sukuk Series 1


100,000,0001000.028/9/2017Bank Sohar Perpetual Bonds

502500001.025/10/2017Ahli Bank Tier 1 Perpetual Bonds


Bonus SharesTable (8) 2017 Bonus Shares

Volume (RO)PriceListing DateCompany Name

SAOG369,65236,96515/3/2017Muscat Thread Mills

3,438,452343,84520/3/2017Gulf Mushroom Products

124,812,51312,481,25126/3/2017Bank Muscat

10,041,5761,004,15828/3/2017Oman Orix Leasing

73,739,0647,373,90630/3/2017National Bank of Oman

2,500,000250,00030/3/2017Al Maha Ceramics

142,440,10514,244,0112/4/2017Bank Dhofar

5,000,000500,0002/4/2017National Gas

18,670,0911,867,0093/4/2017Muscat Finance

5,000,0005,000,0004/4/2017Muscat National Holding

22,841,2232,284,1224/4/2017United Finance

8,133,761813,3764/4/2017National Finance

160,449,93416,044,9934/6/2017Bank Sohar

10,285,0001,028,5004/6/2017Voltamp Energy

63,579,0896,357,9094/6/2017Ominvest

24,997,5432,499,7544/7/2017Al Anwar Holding



Volume (RO)Price Listing DateCompany Name

SAOC

105,895,781105,895,78130/1/2017Mazoon Electricity

262,500262,50016/2/2017Omani Integrated Logistic Services

20,000,00020,000,00019/3/2017Muscat Electricity Distribution

495,000495,00016/4/2017Vision Insurance

224,500,000224,500,00017/4/2017Oman Electricity Transmission

275,625275,6251/5/2017Omani Integrated Logistic Services

10,000,0001,000,00020/8/2017Oman Qatar Insurance

3,500,0003,500,00030/8/2017Oman Airport Management Co.

1,025,7501,025,7508/10/2017Taameer Investment

76,200,00076,200,00014/12/2017Oman Arab Bank

Case TypeListing DateCompany Name

Converted to Closely-Held Co.16/2/2017Areej Vegetable Oils & Derivatives

Converted to Closely-Held Co.22/3/2017Oman fiber Optic

Liquidate the Company 26/3/2017Al Shurooq Inv. Ser. Holding

Delist the Fund Units2/4/2017Fincorp Al Amal Fund

Delist the Fund Units2/4/2017Majan Capital Fund

Converted to Closely-Held Co.18/5/2017Dhofar University

Converted to Closely-Held Co.1/6/2017Oman Textile Holding

Converted to Limited Liabilities16/1/2017Oman International Exhibition Center

8/3/2017Converted to Limited LiabilitiesOman Int’l Sayyarat

22/3/2017Converted to Limited LiabilitiesNational Hotels Ltd.

4/4/2017Converted to Limited LiabilitiesSalalah Hotels

29/5/2017Converted to Limited LiabilitiesOman Logistics

16/7/2017Converted to Limited LiabilitiesOman Dry dock

11/9/2017Liquidate the FundAl Khuwair Hills Real Estate Fund

20/9/2017Merge the company by incorporation into Muscat National HoldingMuscat Insurance

20/9/2017Merge the company by incorporation into Muscat National HoldingMuscat Life Assurance

1/10/2017Liquidate the FundFincorp Oman Private Equity Fund

Complaints Handling

The Awareness and Customer Service Department received 455 formal complaints in 2017 in addition to a number of non-formal complaints which were settled over the telephone between the complainant and the company. Complaints were as follows:

452 formal complaints relating to policyholders

3 formal complaints relating to securities (shares)

A Number of inquiries and non- formal complaints received by telephone from the governorates and Wilayats of the Sultanate which were settled directly between the company and complainant.

Canceled or Converted CompaniesTable (9) Canceled or Converted Companies from SAOG to SAOC

Training & Qualification



[email protected]



Qualification and Training

CMA considers the human resources the prime asset needed for the organization’s success and strength that should be maintained and stimulated, hence it delivered to the employees 135 training programmes and 79 official missions covering diversified topics, in various venues and languages.

Topics of the training courses and official missions were compatible with the visions and mission of CMA coverings capital markets, insurance, law, information technology, management, human resources and other topics such as management skills, presentations, media and planning.

The figure below shows distribution of training programmes and official missions in 2017 by subject

Human Resources

The CMA endeavours to enhance the workforce of the organization with qualified, talented and competent young cadres in the areas related to the supervision and regulation of the capital market and insurance sectors.

Figure (1) shows the number of the CMA employees was 124 distributed according to educational level and gender. CMA attempts to diversify its human resources as regards educational levels and specializations to perform its functions and objects.

Figure (1) CMA employees by education level and gender

1 1

14 20

79

9

15

46

4

14

0

6

33

5

1

4579

124

Total

PHD

Masters

Bachelor’s

Diploma

Below Diploma

PHD

Masters

Bachelor’s

Diploma

Below Diploma

34%

5%

6%

15%

37%

3%

Other

IT

HR

Law

Insurance

Capital Market

Figure (2) Distribution of training programmes by subject


Organizational StructureContact Details


[email protected]



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Abdullah Salem Al SalmiExecutive President

[email protected] | 24823288

Inspection and Examination Department

Huda Al Maamari Director

Inspection and Examination Department [email protected] | 24823184

Executive office

Bader Salim Al-MahrooqiDirector of the President’s Office and Acting

Head of Security Section [email protected] | 24823218

Internal Audit Department

Abdullah Hamed Al Buraiki Director of Internal Audit Department


Archives Section

Yahya Al Jabri Director, Archives Section


Media and External Relations Department

Abdullah Salim Al RabaieiDirector

Media and External Relations Department [email protected] | 24823344

Legal Affairs and Enforcement department

Moahmmed Saif Al Rashdi Director

Legal Affairs and Enforcement department [email protected] | 24823157

Executive Management

Moahmmed Said Al AbriActing Vice President, Capital Market Sector

24823221

Capital Market Institutions Audit and Regulation Department

Rabab Al LawatiDirector, Capital Market Institutions Audit and

Regulation Department [email protected] | 24823132

Trading Surveillance Department

Majid Al AlkiyumiDirector, Trading Surveillance Department


Corporate Affairs Department

Abdullah Al SyabiDirector

Corporate Affairs Department [email protected] | 24823212

Investment Products Department

Musab Al LawatiActing Director

Investment Products Department [email protected] | 24823115


Financial Affairs Department

Ula Al Suwaid Director, Financial Affairs Department


Rabab Al LawatiActing Vice President, Operations

24823223

Administrative Affairs Department

Jokha Al HinaiDirector

Administrative Affairs Department [email protected] | 24823238

Human Resources Department

Nadiya Al Alawi Director, HR


Institutional Services and Awareness Department

Yousf Al Bulushi Director

Institutional Services and Awareness Department [email protected] | 24823175

Information Technology Department

Anwar Suliman Al Kunbashi Director, IT


Appendices

•ListofCompaniesOperatinginthe field of Securities

•ListofInsuranceCompanies

•ListofInsuranceBrokers

Evaluation and Risk Management Department

Naser Ahmed Al Salhi Director

Evaluation and Risk Management Department [email protected] | 24823277

Ahmed Ali Al MaamariActing Vice President, Insurance Sector

24823140

Insurance Institutions Regulation Department

Rashid Al RashdiDirector

Insurance Institutions Regulation Department [email protected] | 24823177

Inspection and Compliance Department

Ahmed Al Harrasi Director

Inspection and Compliance Department [email protected] | 24823114

Audit and Financial Analysis Department

Qais Said Al Suhai Acting Director

Audit and Financial Analysis Department [email protected] | 24823267

Medical Insurance Supervision Department

Taibah Al Shamsi Director

Medical Insurance Supervision Department [email protected] | 24823369

annual report 2017 - capital market authority, sultanate

Documents