Muscat: Oman’s stock market has suffered its worst start in years with investors seeing an estimated OMR675m wiped off their shares in just 11 days of trading.
Yesterday (Sunday) was the most painful of 2016 as share prices on the Muscat Securities Market (MSM) hit a seven-year low, knocking off around OMR250 million in share values in a single day.
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The MSM 30 Index – barometer of the market trend – shed 164.08 points or 3.21 per cent to slump below a psychological level of 5,000-mark to close at 4,948.44 points amid global crude prices touching a 12-year low, which triggered fears of further economic slowdown.
This is the biggest loss on the local bourse on a single day in the past year, after a 4.2 per cent plunge on December 11, 2014.
“It is a kind of weakness which is seen in all regional markets due to a steep fall in crude oil prices,” said Kanaga Sundar, head of research at Gulf Baader Capital Markets.
“It was more of a panic selling across all regional markets with negative sentiments dominating,” added Sundar.
The local and foreign investors have lost OMR250 million in terms of market capitalisation, which is the total value of all shares traded on the bourse (excluding closely-held firms), with the market capitalisation touching OMR9.7 billion.
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Investors are not able to take decisions on the basis of fundamentals of the company, said Tariq Abdul Razeq, deputy general manager at the United Securities. “They do not know where the market is bottoming out. Investors are not able to anticipate what will happen with the current oil price and austerity measures in the budget,” added Abdul Razeq.
Stocks across the Middle East also tumbled as the easing of sanctions against Iran raised the prospects of a surge in oil supplies to a market already reeling from the lowest prices in more than a decade.
Other regional bourses lost substantially, with Saudi Arabia leading the plunge with over 7 per cent fall, followed by Qatar (5.79 per cent), Dubai (4.92 per cent), Abu Dhabi (3.98 per cent), Kuwait (3.18 per cent) and Bahrain (0.37 per cent).
Iran, home to almost 10 per cent of the world’s proven oil reserves, is starting preparations to boost exports after the United Nation’s nuclear agency on Saturday said the country has complied with the terms of an international agreement to curb its nuclear programme. That threatens to put further pressure on prices, hurting the oil-dependent economies of the six-nation Gulf Cooperation Council.
Suresh Kumar, head of research at Al Maha Financial Services, said that it was the first time that the local bourse has declined to its April 2009 levels. “Most of the blue chip stocks are trading at April 2009 levels,” added Suresh Kumar. Foreign investors remained as net sellers on the Muscat bourse, like any other GCC market.
Suresh Kumar added that the market is likely to remain weak in the first half of this year since foreign investors started selling their stocks. “Foreign investors were net sellers for several days since the beginning of January.”
The market turnover was at OMR6.3 million when 21.7 million shares changed hand on Sunday. However, the traded volumes on the Muscat bourse substantially fell since the beginning of the year — from an average daily turnover of OMR5.6 million last year to little higher than two million daily turnover this year.
Market sources said that it is an attractive opportunity for long- term investors to purchase blue chip stocks at this level. More than half of MSM 30 index shares are now trading below their latest book value.
Also, several shares, including Renaissance Services, Al Jazeera Steel, Gulf Investment Services, Al Hassan Engineering and Construction Materials Industries, have plunged anywhere between 9 per cent and 10 per cent or almost limit down.
Suresh Kumar pointed out that a recovery can be seen only in the second half, when crude prices recover in the global market. International Energy Agency projected that the crude oil inventory is likely to fall in the second half of this year, which could help increase oil prices in the global markets.