Muscat: The Omani stock market recorded some volatility during the week and was able to recover to a certain extent from the decline that started in March, according to an industry expert.
“The main index started the week with a strong rebound but corrected during the following days after encountering some resistance near this month’s peak. The market could remain exposed to new losses if conditions deteriorate,” said Denys Peleshok Head of Asia at CPT Markets.
The market was supported to a certain extent by the banking sector which mostly saw positive performances. Banks could benefit from the relative stabilisation in interest rate expectations in the US and its impact on the local economy. “The receding concerns around the US banking sector have also relieved the pressure on banks worldwide and in Oman as well,” Denys Peleshok said.
At the same time, the race toward consolidation in the financial sector in Oman could accelerate as competition seems to be increasing. BankDhofar has renewed its interest in Ahli Bank while other players have entered the game. “Successful bank mergers could increase competition and level the playing field with larger institutions,” Denys Peleshok said.
Mitigated company earnings have contributed to the volatility of the market. While some companies like BankDhofar have been able to post strong or better-than-expected revenues and earnings, helping the market rebound at the beginning of the week, others like Oman Telecom recorded profits that were below expectations although they remained on a healthy trend, pushing the market down in the process.
The main index of the Muscat Stock Exchange (MSX) closed at the end of Thursday's trading at 4,696 points recording a weekly increase of about 30 points. The financial sector index recorded an increase of 56 points, the industry sector index increased by 47 points, the services sector index recorded a decline of 9 points, and the Sharia index fell to 470 points, recording a weekly decline of 8 points.
The market as a whole was also affected by the developments in energy markets. Oil prices have been rising slightly but failed to show a clear direction while uncertainty dominated expectations. The weaker-than-expected Chinese rebound compounded the concerns that the debt ceiling issue in the US could pressure demand. “While prices could rise over the long term with increasing demand forecasts, they could be more volatile over the short term, impacting the Omani stock market’s performance as a result,” Denys Peleshok said.
Natural gas prices followed a more consistent uptrend over the last few days and could recover from multi-month lows if demand picks up during the summer months. Demand could peak during this period as energy consumption could be fuelled by cooling needs with temperatures increasing. Higher prices could start having a positive effect on local sentiment and Omani stock performances.
Overall, the market continues to benefit from the positive and improving credit rating the country has been able to develop. The improving rating conditions could help attract international investors at a time when global sentiment veers toward safety and attention are turning toward safer assets and markets. The rapidly changing market conditions on a global scale have effectively promoted a more cautious investment approach.