MSX sees mitigated performance in weekly trading

Muscat: The Omani stock market recorded a mitigated performance last week and saw some volatility as uncertainty weighed on expectations early in the week, according to an analyst.

“However, the main index rebounded to a certain extent after two weeks of losses. The market was able to recover after temporarily falling below this year’s low,” said Farah Mourad Senior Market Analyst of XTB MENA.
These developments could leave the main index exposed to additional declines although the improvements in sentiment locally and globally could play a role in improving its performance and could provide some support for the market.

Similarly to other stock markets, the Omani stock market reacted positively to the resolution of the debt ceiling issue in the US. A matter that has pushed investors towards caution as they contemplated the potential aftermath of a payment default from the government of the largest economy in the world. “In this regard, local and international investors returned to the market as soon as an agreement was reached between the US president and the Speaker of the House of Representatives,” she added.

Other global markets participated in the limited performance of the Omani stock market such as energy prices. Oil prices have been particularly volatile and have affected traders’ expectations. However, crude was able to recover strongly toward the end of the week. “A more consistent recovery could help the Omani stock market reverse its course. In this regard, traders could react to Opec’s meeting in case any clues or indications that could affect the direction of the market arise,” the analyst said.

On a local level, the banking sector continued to move the market with the wave of consolidations slowly advancing. The confirmed merger of Sohar Bank and HSBC Oman constitutes a new step in this direction. “The operation could result in increased pressure on other banks in the country and could give the consolidated entity a competitive advantage and the capacity to grow further. The stock price of HSBC Oman has increased as a result while that of Sohar Bank declined,” she added.

Other sectors could continue to see some volatility while global economic conditions continue to change and as the global economy continues to slow down. The weaker-than-expected recovery in China could have an impact on exports and in particular oil exports. “Energy demand could come under pressure with manufacturing activity declining in major economies which could reverberate on local stocks to a certain extent. However, this could be alleviated by the strong local economic initiatives,” she added.