Transcript
Speaker: Welcome back to Vantage. We're continuing our market structures series and I am delighted today to be joined by Haitham Al-Sahmi, CEO of the Musket Exchange, who is over for a GCC conference here in London. Haitham, welcome to Vantage.
Speaker: Very delighted to be here with you. Thank you. And happy to meet in person, finally. Excellent. Oman and Muscat have been making some headlines, so I was very keen to get you onto the show. I wanted to start by sort of exploring this question in terms of five years ago, um what did an international institution actually have to do to buy Omani stock?
Speaker: And what is different today? Because I know you put a lot of changes into the exchange. um Back five years ago, we have been always been a frontier market. yeah The participation from foreign investment has been limited. The main lack of of investment in online was the liquidity issue.
Speaker: We understand most of the investors look into exit moves before they enter the markets. So a focus was mainly on creating more accessible markets, fixing the requirement to enroll investors, as well as create the liquidity, the right liquidity that attracts investments.
Speaker: We understand it's not just bringing new investors, it's as well unlocking the the right value of our listed stocks. So we kept market upgrade to emerging status as the core of what we want to do because we understand it's not the ultimate goal but it's the way forward to ensure that we have a recognition of our liquidity. So we work in liquidity boosters. including having more, I would say, instruments to trade, adjusting the free float, removing the ceilings of foreign investors, um linking with the global custodians, having more products that fits the post-trade requirement, including omnibus structure, security lending and borrowing, short selling. That really helped the the market to boost.
Speaker: And the final touch that really created the difference is as having market makers operating in the market and providing liquidity services to the issuers.
Speaker: Okay. And FTSE has put Oman on the watch list for secondary emerging with the next review in April 2027. think they're going to look at the liquidity in December and January. You've been clear that the classification is a recognition, not the goal. So what is the upgrade actually unlocking for Omani companies and for investors?
Speaker: it It is a testament to to what we have achieved, but we meet the requirements. The ultimate goal here is to enlarge the market cap, having more products to the market.
Speaker: So FTSE Russell putting Oman into the watch list it's itself, a testament that we meet the requirements. Going forward, we need to achieve the the full upgrade. We understand that there are followers of FTSE Russell indices and those followers invest in the region based on the wages that we we we take from from this index.
Speaker: So as soon as we get the upgrade, I believe that there will be a good influence to Oman from the followers of FTSE Russell indices, as well as we will be ready to unlock more ah securities and into FTSE Russell's indices as well.
Speaker: It as well shows that the way of calculation of index is is fitting what we do in terms of benchmarking o ourselves to the right free float, benchmarking ourselves to the right ATVR, the traded volumes that required by international investors.
Speaker: Okay, and it's been a good year effectively for listed companies on the Oman exchange. I think the market cap is up around sort of 25% in a year to nearly 100 billion US dollars and you've had a run of significant listings. You've had the OQ companies, asset shipping. What is the pipeline from here and how do you bring the next tier of companies including private and family run businesses to the public market?
Speaker: The best thing that happened that when we benchmark ourselves to the GDP and that's where we see whether we are in the right size comparing to our size of economy. Yeah. So we started back in 2020, which is the baseline of of MSX. We were 20 percent that traded equity and bonds comparing to the total size of the GDP. Yeah. We were at 20 percent. Currently, we are close to 40 percent. And that's almost developed what we used to be. um I think unlocking the value of the listed company is the the best thing to do toward bringing more attention to the exchange. yeah If we want to list issuers, so if we want to list family businesses, we need to unlock the value.
Speaker: Without the liquidity, the while the value was at its lowest. The companies used to pay a dividend yield of approximately 9% to create the value. Now the average in the market is below 5%. The difference is is where the prices went up.
Speaker: Our market performance last year was at more than 28%, and now year-to-date we are at 31%. That itself has has allowed has moved the the valuation up, and it allows the companies that are like really looking to distant exchange to have the right value for their shares, so the shareholders will maximize their wealth.
Speaker: Okay, perfect. um and And look, you've got this upgrade, which in part is dependent on investable size, and I think you've touched on the things that you're doing there, and the number of eligible securities. But ultimately, I mean, that translates into liquidity and visibility. So beyond infrastructure, all the work that you've done, what is the exchange doing to make its listed companies better known and more actively traded?
Speaker: The first thing is is to allow the companies to be benchmarked to the cross-border companies, so our neighbor companies. So what we did here, we worked with the GCC closely to have a unified ESG metrics and a unified IR best guidelines. yeah And to build on that, now the companies of Oman can be benchmarked because they are following the same standards as the other GCC companies. Now we need to bring more attention and that's what we want to do when we sponsor researchers to have more coverage first of all and the the new researchers will will touch different types of investors, different investor databases and that's where we we are signing together sponsored research project that will bring the visibility of our companies and will unlock a more wider investor base to Oman.
Speaker: Yeah, and I think, look, I mean, this is a a sort of a really interesting sort of piece of work that we're doing with the Exchange in that it's very much a collaboration with the Exchange, independent research coverage across your larger issuers, you know, also amount of thematic and some some work in terms of a newsletter just to profile what the Exchange is doing, some IR workshops that we're sort of putting in place. um Why did the exchange take a lead on research and investor engagement rather than just leaving it to the issuers? and And what do you hope it's going to deliver?
Speaker: So going back when the liquidity was a concern at Oman, The appetite from investors analysts to cover Oman was too low.
Speaker: Now we do have the volume required for foreign investors to come. yeah So the number of researches that are published are mainly local and within the region. So we thought that to increase visibility, to bring more standards in terms of the way those researchers and analysis analysts structure the reports, I think we need to go beyond the local and region.
Speaker: And that's where this alliance with Edison happened. because we understand the way they they will look into the companies, the coverage they will they will do, as well as the outreach to investors will totally differ than if we just consider the locals.
Speaker: Being at the FTSE Russell watch list is an additional layer that requires us to move a little bit more outside the region and bring more attention. yeah So the plan here is to have a two years of of collaboration, researches, coverage, updates, and then we we push it forward to the the issuers because they will feel the value. yeah Sometimes you need to take the first hit to create the value and the value will itself rotate in the whole economy. Yeah, so the exchange is effectively playing the role of the spark poke to get the engine going. We are the ignition of the project yeah and hopefully that the whole issuers will take it forward from there. Yeah, um and out look, you're competing against the same EM allocations to Saudi, the UAE, Qatar.
Speaker: What is your pitch in terms of you know what is what makes you relatively more attractive to your to your neighbours and indeed you know your your agenda, how does it fit in with the country's wider 2040 agenda?
Speaker: We understand that investment has no passports, they flow between borders easily. I think the attractive is is the opportunities that we offer to the investors. So what we want to do is not just competing in terms of being an exchange, it's competing with the type of companies, the reward that the companies are giving. I think the GCC has already went through the EM story and the next story is Oman.
Speaker: And that's what we are betting on. As well, we have reached the liquidity required to build additional products on what we have currently. yeah To have ETFs, to have derivatives, we need a liquid market. Now we have the liquid market. I think we the next phase will be bringing new products that will fit the requirement and the appetite of investors.
Speaker: I really enjoyed a piece you recently put out where I think the quote was, it's not a project, the transformation is not a project with a fixed completion date, and which felt aspirational that this this is a journey. What's on the list for the sort of next phase? I mean, I think you touched on some of this products, infrastructure, connectivity, but I'd like you to sort of summarize it.
Speaker: And if I was to ask you, what's the one measure you want to be judged on over the next three years, what would it be? We'll continue the pipeline of the IPOs yeah to have more products, more ah sectors covered, and that will help us reflect the real economy of Oman through the indices that we have in the market.
Speaker: We will build products on those products, including ETFs, including derivatives that will help the ecosystem to create more liquidity. Furthermore, we are looking into digital products as well, tokenization.
Speaker: The announcement of Oman International Financial Center will open gates for the exchange to explore the opportunities where we can be part of this initiative and offer more products based on international flavors within the common law requirements.
Speaker: Okay. python ah Firstly, let me congratulate you on what's been achieved because it has been sort of spectacular in terms of you know how the country has emerged and where you brought it to. um And I also sort of will hold you to this idea that you know it's not ah you know this is not the end, that there is more to come. We're very much looking forward to the collaboration. Thank you so much for coming on to Vantage. Appreciate it. Thank you very much. I would say we are just starting.
Speaker: what What we have achieved is just the baseline of what we can really provide and achieve later on. Thank you.
