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Oman stock market is far from being sleepy
Largely lacking its neighbours' energy revenues, Oman is often portrayed as the Gulf's most somnolent country.
- By Robin Wigglesworth, Financial Times
- Published: 00:01 August 9, 2008
Largely lacking its neighbours' energy revenues, Oman is often portrayed as the Gulf's most somnolent country. But, in one regard at least, that characterisation would be an injustice:
Muscat's stock market has been far from dozy.
Undeterred by global credit worries and inflation concerns, Muscat is one the best performing bourses in the Gulf - up 19 per cent this year. A dollar invested in the Muscat Securities Market 12 months ago would have doubled by now.
While the size of the market is a relatively modest $27 billion - about 3 per cent of the overall market capitalisation of the six states of the Gulf Co-operation Council - the MSM is deeper than most regional equity markets with 134 listed companies.
The reason for the bourse's performance is not hard to trace.
The Omani economy expanded a nominal 42.9 per cent year-on-year in the first quarter, supporting corporate earnings and disposable incomes of Omanis, according to analysts.
"People tend to overlook how strong the Omani economic story is," says Simon Williams, chief Gulf econ-omist at HSBC.
Aided by the healthy economy, earnings are expected to grow 35 per cent this year according to Vision Investment Services, an Omani brokerage, adding to the allure of a market that is still cheap relative to other Gulf stock exchanges.
Oman is also open to foreign investment. While many individual companies have statutes that cap non-Omani ownership, the MSM allows foreign ownership of up to 100 per cent, with no capital gains tax, and investors may appeal to the Capital Markets Authority to overturn ownership limits.
Tellingly, Gulf investors hold nearly a fifth of the market while non-Arab investors own almost a tenth.
Book-running
Unlike the rest of the Gulf, book-running when launching an initial public offering is the norm, reducing volatility when the shares are listed.
Thus Oman may be less prone to the extravagant boom-and-bust cycles of its neighbours, bankers say.
The market has recently dipped, as second-quarter earnings of big companies such as Raysut Cement failed to meet expectations.
Furthermore, while the economy may be doing well, inflation is soaring.
Inflation has spurred Omanis to place their savings in the stock market, rather than in the banking system where real interest rates are negative.
But in the long run inflation is likely to put pressure on spending power and weaken investment appetite.
Investors in the Muscat stock exchange, however, remain optimistic for the present.
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