Omani stocks rebound but remain exposed to the downside

Muscat: The Omani stock market was able to recover to a certain extent this week after a significant fall during the previous week, according to an analyst.

“However, the main index could remain exposed to another round of price corrections as it failed to return to the levels seen during July and August, a period during which it traded horizontally although with some volatility,” Daniel Takieddine, CEO Mena BDSwiss, said.

“The market’s rebound could be faced with resistance at the bottom end of its previous trading range and could move toward the lows of the year,” he added.

The MSX 30 recorded a positive performance of 0.77 percent this week supported by the financial and services sectors which recorded 0.65 percent and 0.82 percent increases respectively. However, the industry sector continued to decline with a 0.51 percent loss over the week, extending more than two months of negative performances. “Overall, the market benefited from an improvement in the value traded during the week compared to the previous week although trading volumes declined slightly over the same period,” Daniel Takieddine said.

Within the financial sector, gains were recorded by banks mostly with Ahli Bank leading with the strongest performance while other segments were recording losses. Banks also dominated trading volumes with Bank Muscat, Ahli Bank, Sohar International Bank, and Ahli Bank recording the highest volumes this week. Banks could continue to see strong performances if loan growth remains at strong levels in particular while interest rates are elevated and stable.

In this regard, traders’ attention should be focused on the Federal Reserve’s meeting and its president’s speech in the coming days for hints about the evolution of its monetary policy. “While the Federal Reserve is widely expected to maintain its rates unchanged, some doubts remain regarding another rate hike this year which could affect the Omani economy and the stock market to a certain extent if it materialises,” Daniel Takieddine said. US economic data releases have consistently been stronger than expected and could affect the Federal Reserve’s stance.

At the same time, the developments in oil markets have been positive for the Omani economy and stock market and could continue to drive sentiment to the upside, Daniel Takieddine said. Crude prices could extend their climb as supply level concerns dominate as Saudi and Russian production cuts could continue to limit available volumes. Stronger Chinese economic data could also help drive prices up as new economic measures prop up activity and demand for oil.