x Abu Dhabi, UAEWednesday 24 January 2018

Oman's first Islamic bank a hit

Markets Update: Oman's stock market is revived as Bank Nizwa, the country's first Islamic lender, draws investors into the bourse.

Oman's Bank Nizwa yesterday rallied as much as 17 per cent on its first trading day as a public company, amid expectations that the country's first Islamic lender will benefit from a big untapped appetite for Sharia products.

Bank Nizwa last month said it was looking to sell 600 million shares to raise US$158.9 million (Dh583.6m) from investors. Its initial public offering was 11 times oversubscribed, generating $1.77 billion of bids. Yesterday was its first trading day since the share sale.

"It is a new market being introduced in Oman for the very first time, while globally, the appetite for Sharia products is quite good," said Kanaga Sundar, the head of research at Gulf Baader Capital Markets in Muscat. "Growth in Oman could be phenomenal, because we are starting from a low base and at the same time there is substantial unfilled demand here."

Bank Nizwa is expected to launch its operations in the third quarter, starting with the opening of three branches - in Muscat, Nizwa and Sohar.

The IPO of the Islamic lender follows a decree in May last year from Oman's ruler, Sultan Qaboos bin Said, to establish an Islamic banking sector and allow conventional banks to offer Sharia-compliant products.

Bank Nizwa's shares jumped 12 per cent to 0.013 Omani rials in morning trading, causing Oman's generally low-liquidity bourse to more than triple its trading volume. The stock rallied as much as 17 per cent at the open on the Muscat Securities Market.

Traded value surged from 2.8m rials (Dh26.8m) on Thursday to 10.8m rials yesterday. Oman's MSM 30 Index fell 0.4 per cent to 5,756.87 yesterday as investors sold local stocks to buy into Bank Nizwa. The success of the IPO followed by the stock's surge shows that the entrance of a new company or sector can help to boost trading activity on GCC bourses, said Haissam Arabi, the chief executive of the asset manager Gulfmena Investments in Dubai.

Some institutional investors in the UAE abstained from the IPO because it was deemed too small.

"If Gulf stock markets want to add shareholder base and depth to the overall market, they need to expand their offering and bring in new companies that represent an investment opportunity," Mr Arabi said. "Bank Nizwa was one such example."

Al Izz International Bank, another new Islamic entrant, is expected to launch a share sale of 40 per cent of its 100m rials capital this month, according to a statement released by Oman's central bank earlier this year.


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