Business | Markets
Banks weigh heavily as Oman shares plunge
The banking sector took a severe beating as Oman's Muscat Securities Market (MSM) slumped by 441 points at close of trade on Thursday.
- By Sunil K. Vaidya, Bureau Chief
- Published: 23:47 October 16, 2008
Muscat: The banking sector took a severe beating as Oman's Muscat Securities Market (MSM) slumped by 441 points at close of trade on Thursday.
While stocks tumbled further for the second consecutive day, the banking and finance industry representatives urged the government to inject some liquidity into the local Omani banks.
Khalil Bin Abdullah Al Khonji, chairman of the Oman Chamber of Commerce and Industry (OCCI) chaired a meeting of the banking and financial sector companies at the chamber on Wednesday.
The meeting hailed the measures taken by the government in supporting financial markets and boosting investor confidence in the national economy, notably through the actions taken by the Central Bank of Oman (CBO) and the Capital Market Authority (CMA).
The meeting, however, emphasised the need for government to take precautionary measures and to avert any unforeseen negative impacts on various economic sectors.
Steps
Among the measures being considered by the participants is an appeal for financial liquidity to be provided to local banks operating in Oman to cover the needs of current and future developmental projects.
Participants also urged easing procedures to enable firms to purchase shares through a decision of the board of directors without waiting for general body approval.
Introducing a Deposit Guarantee Fund, and other confidence boosting measures will also help, they stressed.
Participants were of the opinion that solutions to the crisis lay in each country taking steps in coordination with other countries, notably by pumping liquidity into banks and financial institutions, lowering interest rates, protecting banks through the purchase of equity shares, increasing their capital and guaranteeing deposits.
Yesterday, BankMuscat suffered the most damage as its equity went down by 8.6 per cent on a day market went down by 5.74 per cent.
Overall, the banking sector went down by 620.8 points on a day when 18 per cent of the total sellers in the MSM were foreign investors.
Industries also suffered a 324.64 points loss as services and insurance sector went down by 152.16 points.
"The market went down further today due to the global sentiments, especially the US markets," believes Vijay Sridharan, Research Analyst with Gulf Baader Capital Markets.
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