Muscat: Foreign investors are offloading shares on the Muscat Securities Market (MSM) as net selling of non-Omani investors has touched OMR25.15 million so far this year.
Foreigners have been net sellers for OMR11.5 million so far this year. Regional investors also remained sellers for OMR12.5 million. The selling was absorbed by local institutional buyers,” said a research note released by United Securities. Arab investors (who are not included in the regional investor category) were net sellers to the extent of OMR1.5 million.
Foreign investors, including regional players, are offloading their holdings on the Oman bourse like other regional markets, mainly due to a drop in oil prices, which touched a three-month low last week.
In fact, foreigners were buyers during the initial three weeks of the year and then remained sellers for most of the days.
They were selling shares of Bank Muscat, Oman Telecommunications Company (Omantel) and Ooredoo Oman.
Foreign investors generally show an interest in stocks, which are highly liquid with better market capitalisation. “The foreigners are getting out of the market,” said Joice Mathew, head of research at United Securities.
The total holdings of non-Omani investors on MSM are currently estimated to be around 27.72 per cent.
Suresh Kumar, head of research at Al Maha Financial Services, said an increase in the U.S. Federal Reserve’s rate is expected within a couple of weeks. “There will be reallocation of funds by foreign investors since there will be an appreciation in the dollar value. Dollar denominated investments will fetch better returns. As a result, the yield curve could be better in some other markets.”
According to United Securities, non-Omani shareholdings in Bank Muscat came down from 29.57 per cent at the end of December 2016 to 28.86 per cent as of last week. This means a combined selling of 17.5 million shares of Bank Muscat. The total volume at the Bank Muscat counter was around 47.5 million shares.
Kumar also noted that traded volumes on the local bourse were slightly better this year, compared with last year.
There will be a dividend adjustment between mid-March and the first week of April. “A 3 per cent adjustment cannot be ruled out.” Thereafter, market analysts expect a recovery since the valuations are low.
The prudent measures of the government are expected to help a market recovery.