Monday 16 / September / 2024
Muscat: Oman’s benchmark Muscat Securities Exchange (MSX) index recorded a strong performance this week, extending this month’s gains, according to an analyst.
“While the index recovered consistently during June the main index remained below May’s peak, which could constitute a resistance on its way up,” said Denys Peleshok, Head of Asia at CPT Markets.
However, the market remains on an uncertain trend and could be exposed to some risks while retaining the potential for growth over the short term, he added.
On a larger scale, the Omani stock market could benefit from the temporary pause in interest rates in the US, which could leave more breathing room for the economy to grow without additional pressures on financing costs. However, as mentioned by the Federal Reserve’s president, new interest rate hikes could be decided in the coming months, opening the way for potential price corrections, said Denys Peleshok.
At the same time, the aggressive monetary policy could continue to push the already low inflation figures in Oman further down. Local figures contrast with inflation levels in the US which remain comparatively higher. However, as interest rates in the US approach their peak, new pressures could be limited over the medium term in particular if rates start to come down later next year.
The stock market could continue to find some support in the positive growth the country is expected to see this year. The economy could find support in the strong performance of the non-oil sector while the energy sector could be impacted to a certain extent by the volatility in oil prices and OPEC’s decisions. However, the concerns around global economic growth could contribute to some uncertainty, said Denys Peleshok.
On the energy market, oil prices have been directionless for almost two months and recorded strong volatility. Traders have been monitoring economic developments in the US and Europe, where higher interest rates could affect growth, as well as in China, which continued to see a weaker-than-expected recovery, affecting demand expectations in the process.
Denys Peleshok further said that the financial sector remained a highlight for the market and performed strongly this week with banks continuing to draw attention as consolidation efforts carry on. The banking sector could see more strength with the merger of HSBC Oman and Sohar International underway.
In comparison stock markets elsewhere were seeing mixed performances in particular in the Gulf Cooperation Council (GCC) where rebounds were uneven with some markets stagnating. In the US and Europe, stocks were mostly declining with traders taking the tightening monetary policies’ effect on the economy into account, said Denys Peleshok.
“While trading in the Middle East will be limited next week due to the holidays, traders will be monitoring some important figures regarding the US economy in particular the real estate sector, the job market, and the GDP growth figures as well as the manufacturing sector in China. These figures could affect local markets when they reopen the following week,” Denys Peleshok said.
