Haitham Al Salmi, Chief Executive Officer of Muscat Stock Exchange, talks to TBY about market capitalization, ESG concerns, and attracting investment.
How is Vision 2040 impacting market capitalization and turnover?
Muscat Stock Exchange in its development journey has gone through a remarkable transformation over the past two years, some of which being the privatization of the exchange in light of Royal Decree No. 5/2021 issued by His Majesty Sultan Haitham bin Tarik & infrastructural reforms such as the new executive board and management, dedicated to the accelerated growth approach in keeping pace with the global capital market trends. One of the catalysts of these accelerated government initiatives to support the capital market is Oman vision 2040 as it captures the importance of reducing the Sultanate’s dependence on hydrocarbon revenue to the GDP, reduction in sovereign debt levels, and enhancing the country’s credit rating by the introduction of a Midterm Fiscal Plan (2020-2024) and the creation of OIA (Oman Investment Authority) that acts as an enabler to achieving economic diversification, empowering the private sector and supporting capital market deepening. These accelerators help navigate public finance trends in the Sultanate anticipating a boost in non-oil-based revenues and FDI inflows onset-ing capital market development in Oman. In order to enable this subsequent expansion, at MSX we materialized a 5 years strategic plan with Six main objectives revolving around boosting investor confidence, introducing new investment products, continuously upgrading trading technology, facilitating the listed company’s financial performance, in turn, the markets financial performance and last but nevertheless the exchange’s commitment to its human capital development. MSX 5 years Strategy helps the exchange set clearly identified targets to support the government efforts of advancing economic diversification by partnering with relevant local bodies to create listing incentives and promoting awareness on public fundraising all the while conforming to international best practices and standards enforcing the competitive position of the exchange and ultimately serve the optimal goal of promoting the Sultanate as an attractive investment destination. A transformation in line with Oman Vision 2040 will have a direct impact on market capitalization and turnover.
How is MSX intertwined with environmental, social, and governance (ESG) concerns?
MSX being the trading platform provider to the Oman securities market is at a unique disposition to tie in the ability to support local issuers in building ESG best practices, given that ESG today is an emerging global trend in the international capital market arena. MSX regards ESG as ahead of its sustainable goals and vision for the local capital market and to maximize the learning & development on the concepts of ESG & Sustainability with regular training programs and workshops dedicated to building ESG capacity in the market we have created a ‘Sustainable Investments’ Section that leads the march of ESG for the local issuers. In order to provide the market participants with sustainable development goals and standards, MSX announced its joining of the UN SSE (Sustainable Stock Exchange) initiative on the 20th of December 2022. This initiative enables the exchange to undertake a more proactive role in implementing international benchmarks while developing standards that are “tailor-made” to the specific needs of the local capital market alongside engaging different stakeholders and supporting market participants in the journey towards procuring sustainable finance. Under this collaboration, MSX signed three (3) memorandums of understanding (MOU) with different local governmental entities that regulate ESG (Environmental, Social, Governance) practices and will help promote a culture of sustainable investment in the market. The three local sustainability partners of the exchange are the Ministry of Social Development (MOSD), the Environment Authority (EA), and the Ministry of Commerce, Industry and Investment Promotion (MOCI) to lay the foundation of the mutual cooperation and exchange of data & expertise in the relevant layers of ESG, through the adoption of overall sustainable governance mechanisms. The exchange intends to continue to grow its sustainable partner network. Therefore, MSX also recently joined the GCC ESG working group that is facilitating the unification of regional ESG Standards Matrix, unified ESG disclosure guidelines that will pave the way to global ESG best practices for the regional markets. Similarly, we plan to soon head the path of ESG mandate, a soft circular paving the way forward towards the basic ESG disclosure necessary for the market and issuer development in order to secure future sustainable financing. We also understand the importance of strengthening the investor protection framework in the market for the creation of a sustainable stock exchange, thus we are promoting awareness and partnering with relevant international and regional institutions on IR (Investor Relations) such as MEIRA (Middle East Investor Relations Association) that MSX is currently a head of at Oman Chapter to ensure prompt advancement of the market.
What steps are being taken to promote the financial markets in Oman and attract more institutional investors to MSX?
MSX is moving consistently towards achieving its vision of being a world-class exchange with a global presence. Through its 5 years strategy, MSX is striving to improve the liquidity status in the market by focusing on the main priority of upgrading the market to the emerging markets list by satisfying the international indices (MSCI and FTSE) requirements which would facilitate capital inflows, widen investors’ base and hence increase market depth. And to attain this, MSX has lifted all restrictions on foreign ownership limits for all listed securities and is working on introducing market-making and liquidity-providing services along with the market feature necessary for these operations such as short selling, margin financing, and securities lending and borrowing. Additionally, we are strengthening connections and establishing partnerships with regional markets such as Saudi Tadawul, Abu Dhabi Securities Exchange, Bahrain Bourse, and Iraq Stock Exchange to enhance integration and cooperation in different capital market aspects such as the recent announcement of a dual cross-listing agreement between MSX & Tadawul. MSX is also actively incorporating such opportunities of establishing cross-listing links with GCC markets with the aim of increasing the visibility of local companies and allowing them to capitalize on the relatively higher trading activity and market coverage. To increase market accessibility we have signed an agreement with Abu Dhabi Securities Exchange and Bahrain Bourse to join the Tabadul Hub in which GCC investors would have the ability to trade in different regional markets through an integrated platform. In the year 2022, we inaugurated the Annual MSX Investor Roadshow to attract the attention of the global investment community and to introduce the growth prospects of locally listed companies. These are all the steps taken towards promoting the local capital markets and making the market more liquid more attractive to institutional investors from around the globe while strengthening our retail investors’ confidence and maintaining the market integrity by creating a sustainable ecosystem for market forces to take their course and provide a conducive investment environment.
