Muscat Securities Market slumps to lowest in over a year

Muscat: Oman's Muscat Securities Market (MSM) hit a new low when the MSM 30 Index crashed by 587.9 points (8.290 per cent) to its lowest level - 6,506.030 - in over 12 months.

The panic stricken market had no buyers even for blue chip companies like BankMuscat, Omantel, and Gulfar as fear of further falls gripped the market.

"It is a virtual panic condition," said an analyst on condition of anonymity.

Investors fear a crash like that of February 1998 when the index fell by 70 per cent. "At that time the market had crashed after a long six-year bull run in which the MSM index had gone up 500 per cent from 1,020 to 5,098," the analyst said.

This time again the six-year bullish run has seen the market grow by 831 per cent, from 1,463 in January 2002 to 12,200 in June this year.

Time correction

Analysts believe that the correction has to take place. "The market could bottom up sometime next year," another analyst said.

"MSM was in a secular bull run from December 2001 to June 2008," Sunil Dhall, vice president of Business and Product Development, at Gulf Badaar Capital Markets, told Gulf News.

"The price correction on MSM has been very sharp and a lot of it can be attributed to technical factors like lack of buyers, financial crisis, the global crash and selling rather than any change in fundamentals," he said.

He also said that in the long run GDP and the market go hand in hand. However, Oman's GDP has shown compound growth of 13 per cent in the last five years against 30 per cent compound growth of the MSM Index.