The IPO of shares in Oman Telecom-munications Company (Omantel) closed on 10 July. Oversubscription to GCC IPOs has become par for the course, but was less assured in the case of Omantel in light of the restriction of purchases to nationals, and for the most part - 21 per cent of the 30 per cent of capital offered - to individual rather than institutional investors. For the RO 202 million ($518 million) worth of shares offered to individuals, subscriptions in excess of RO 620 million ($1,590 million) were received. A listing is due in early August (see Banking & Finance).

'To a certain extent the IPO has sucked liquidity out of the market in recent weeks, but the large number of new investors participating has limited the phenomenon,' says Tariq al-Assour, investment manager at the local Ominvest. 'But the longer-term result will be a considerable increase in market capitalisation and also an increase in trading, as local investors take profits when the bar comes up and they can sell their shares to foreigners and institutions [in three months]. Omantel will become a headline stock which any portfolio investor will want to have on their books.'

The second landmark was the deal brokered by Al-Madina Financial & Investment Services, worth RO 80 million ($205.1 million), for the sale of shares by the Suhail Bahwan Group, Mohammed al-Barwani Holding and Abna Sultan Trading, by which the three divested all or part of their holdings in National Bank of Oman (NBO) to Commercial Bank of Qatar (CBQ). A proposal for CBQ to take a 34.9 per cent stake in NBO was approved by the local bank's shareholders in late June, with the Qatari bank gaining management control.

'The market has been supportive of the deal,' says Al-Assour. 'It is also still positive about Bank Muscat because of the lesser risk engendered by its spread of exposure outside the sultanate. However, the banking sector is at the moment fully valued so it is not the best time to invest there.'

With the benchmark MSM index up by more than 60 per cent since the start of the year, the number of bargains is shrinking. Average price/earnings ratios are still a modest 15, however. Certain funds, such as the Oryx Fund, are trading at a discount, allowing more profitable exposure to the blue chips.

Al-Assour also points to the strength of certain industrial firms, among them Oman Chlorine and Gulf Polypropylene Production Company. 'Brokerage companies such as Fincorp are also looking wise picks,' he says.