Every once in a while there is a newspaper article that, if true, means we have to change everything we believe about something important. Last week's 'Sunday Beat' (July 21) was just such an article.
Under a gentle headline claiming corporate transparency in Oman is still elusive, the article itself suggested something much deeper and more sinister was going on — the executives of companies listed at Oman's stock market are systematically defrauding Omani investors in multiple ways, and could be using a coffee shop near you to drop off inside information.
This is dramatic, serious, and worrying — if true. It would mean that not only are investors losing money because the Muscat Securities Market (MSM) is appallingly regulated and managed, but a portion of the country's future economic growth and job creation are under threat.
The Capital Market Authority (CMA) is the regulator of the Oman stock market, and part of our job is to set the rules for the market, and oversee behaviour to make sure that everybody plays fair and by the rules.
The theme of the article was rather a shock to us, as most of what we see and investigate on a detailed and daily basis tells us the opposite to what was claimed. And we like coffee shops.
Nevertheless, given such strong and public accusations we immediately asked ourselves some questions: what exactly are these allegations in detail — and are they true? What does the author of the article know that we do not, so that we can act upon it?
Firstly, let us look at the allegations. These include that: serious international investors are not coming to the Oman market because they "cannot be fooled" by the lack of transparency and corporate governance and disclosure; that remaining local Oman investors are being "hoodwinked" by "holes deliberately crafted by business leaders who control the listed companies"; and these business leaders are also "striking dodgy deals under their executive tables" and "receive thousands of free shares".
And it gets even worse. These business leaders are apparently "carelessly" (for which, read 'deliberately') and "rampantly" leaking information such as by "leaving confidential files at a popular coffee shop for somebody else to pick up". To cap it all, these business leaders are "carefully orchestrating" events to routinely mislead investors at company Annual General Meetings (AGMs).
As a result of all this, the article claims, "blue chip shares being traded at MSM are still languishing at the bottom, even as most global markets are recovering….wiping out thousands of rials from original investments".
These are strong allegations indeed and, if accurate, then there is clearly a major conspiracy among business leaders at the heart of the market.
Unfortunately, the author has given us no facts we can check to back up his allegation, though he does make general claims to support his theories — claims such as an alleged lack of foreign investors at MSM, and alleged continued low price of shares at MSM. These, however, are very strange claims to make, as they are so clearly opposite to the data.
Firstly, the level of foreign ownership at MSM is high, not low. At the end of 2012 international investors owned 28 per cent of the companies listed on the MSM, up from 26 per cent the year before. This is some way ahead of any other GCC market. By comparison, in Abu Dhabi 7 per cent of the listed market capitalisation was owned by foreigners by the end of 2012, up from 5.3 per cent the year before.
It is a similar story in Qatar, Dubai and Kuwait (Saudi does not allow non-GCC foreign investors). Looking further afield, the level of foreign ownership of stocks at MSM is higher than in many markets, for example Malaysia, India, China and the USA.
Yes, on a relative-size basis more foreign investment sits in the Oman stock market than in the New York and Nasdaq Stock exchanges! Only in Europe is the level of foreign ownership of stocks consisten