Main Omani index remains largely below this year’s peak

Muscat: The Omani stock market continued to trade sideways with no clear direction in the week, maintaining the same trend since the beginning of July, according to an industry expert.

The market could remain in an uncertain direction with caution increasing among investors on the global stage. The concerns regarding monetary policy in addition to the downgrade in the US credit rating have rattled markets and affected expectations and could continue to fuel volatility and risks over the medium term, he further added.
“The main Omani index remains largely below this year’s peak signalling risks of further price corrections as traders could remain cautious,” Ahmed Negm Head of Market Research MENA at XS.com.

“Omani stocks recorded mixed performances. While their gains were limited, the financial and industrial sectors supported the market overall. Trading volumes declined compared to the previous week adding some pressure on the market,” he added.

The financial sector attracted the largest trading volumes following the developments in bank consolidation. Sohar International is expected to complete its merger with HSBC Oman shortly, potentially creating a stronger competitor in the market. This contrasts with the cancelled bids for the acquisition of Ahli Bank. “Overall, the banking sector could find some support as financing costs could stabilise at elevated levels, helping keep banks’ profit margins strong and limiting pressures on the economy,” Ahmed Negm said.

The US credit rating downgrade has created significant concerns on the global stage, impacting appetite for risk among investors and affecting their willingness to invest in other markets like the Omani stock market. The change in rating could prompt investors to move toward safer assets, reducing liquidity elsewhere.

However, the Omani stock market could find some support in the developments in oil markets, Ahmed Negm said. “Prices have resumed their rise after Saudi Arabia extended production cuts. Higher prices could support local sentiment and appetite for risk. Omani crude prices followed suit. At the same time, larger than expected draw-downs in US crude inventories could fuel expectations for stronger oil demand,” he further added.

Next week, traders’ attention could be directed toward inflation data in the US which could become increasingly critical as expectations change rapidly regarding the outcome of the next Federal Reserve meeting. The uncertainty could create some volatility during the weeks until the meeting.