Interview: Khalid M Al Zubair
How can the capital markets sector best support the growth and diversification of the economy?
KHALID M AL ZUBAIR: The capital markets sector acts as a catalyst and an intermediary between retail and institutional investors and institutions seeking capital. The capital market in Oman is no different. As the market matures and grows, various factors change, including the regulatory environment, investor maturity and the market appetite for financial products. This change represents the market’s scope and ability to offer alternative sources of financing, presenting capital-seeking firms options outside of the conventional banking system. This stable and readily available form of capital is well placed to accelerate growth in the economy.
As a result, the capital markets sector plays an important role in providing a platform to link private savings and investors to support the diverse business opportunities of Oman’s economy. While the sector is fairly well structured and regulated, the driver for strategic growth and diversification will ultimately be the country’s ability to leverage its competitive strategic positioning to attract both domestic and foreign investment.
Does Oman have the potential to compete with the likes of Dubai and Saudi Arabia?
AL ZUBAIR: Although smaller in terms of listings and volumes, Oman is a competitive market, with many leading GCC countries listed and operating locally. The announcement by MSCI to upgrade the UAE and Qatar exchanges to emerging market status will undoubtedly boost their standing in regional markets. However, Oman’s focus has been on long-term value creation with an emphasis on protecting investors and maintaining stability in the market. Traditional markets in Europe and North America have experienced tough times, which have shifted investor interest to opportunities in the emerging markets. Oman and the GCC have become especially attractive investment destinations. The sultanate has taken substantial steps to align itself with global standards in transparency, risk management and corporate governance, which are increasingly important factors for international investors.
How can the Muscat Securities Market (MSM) become a lucrative vehicle for raising capital?
AL ZUBAIR: The MSM is a well-regulated and stable market, and there has been increased interest in the market mainly due to the quality of the listings. Financial institutions, which have been the key source of funding for local and regional corporates, are among the many who are becoming more interested in the MSM. This is good news for the listed companies, which are always looking for alternate sources of funding. To grow the market further, equity and debt instruments need to be developed and listed on the MSM, and a sovereign debt market should be created so that local debt can be benchmarked and developed.
A transparent and well-governed market is essential to link financial institutions with local and regional corporates. From there the market will grow organically, creating a win-win situation where companies will have a working market to raise capital and investors will net healthy returns from their investments. As more products become available to facilitate this, investor education will become vital. Appropriate steps must be taken to create a regulated market with the appropriate disclosures. Although demand for complex financial products is very low at the moment, a controlled supply should be made available to create a market.
Is government intervention necessary to increase the number of listings on the MSM?
AL ZUBAIR: The size of the listings and the availability of free float are more relevant than the number of listings. In a developing economy such as Oman’s, where the large businesses are family owned and public participation in capital markets is a relatively new theme, government intervention is needed to encourage citizens to channel their savings into publicly listed companies and thus benefit from Oman’s economic growth.
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