MSM may rally on declining risk aversion

Muscat Securities Market (MSM) is likely to recover with local investors staging a come back, according to stock market operators and analysts. Better fi - nancial results coupled with boom in neighbouring GCC markets are also aiding the recovery.

“Local investors are coming back to the bourse as risk aversion is vanishing. As a result, the funds which were on the sidelines are all coming back to the market,” said Sankar Kailasam, senior vice-president of Gulf Baader Capital Markets. Saudi bourse recently touched a threeyear high, while Dubai was not far behind.

Echoing a similar view, Joice Mathew, Head of Research, United Securities, said, “Oman always follows regional bourses like Saudi and the United Arab Emirates. When Saudi and the UAE bourses go up, Oman follows.” MSM general index, the barometer of the market sentiment, remained more or less same at 5696.32 points on Thursday, compared to 5695.12 at the beginning of the year.

Funds, have increased their buying in the market. Foreign institutions are also watching better confi dence on the bourse. They will also extend their support as they have better investment opportunities,” added Mathew.

Better dividend yield of the corporate sector is also propping up sentiment. According to rough estimates, Oman’s listed companies will pay as much as RO250 million as dividend. Of this, at least 40 per cent to 50 per cent of dividend money will come back to the primary market. However, it did not happen last year due to the sluggish trend in the market. The better activity on the bourse is refl ected on traded volumes as well, with daily turnover increasing to RO3-4 million now from RO1.5 to RO2 million earlier.

Kailasam said there is a better attraction for high dividend paying companies. The stocks of services and industrial fi rms are going up than other stocks. It is anticipated that at least fi ve banks, including two Islamic banks, will come out with initial public off erings or rights issues to raise capital base. “This will take away a portion of liquidity from the market.”

The banks that plan share offers are Bank Nizwa, Al Izz Bank International, Oman Arab Bank, BankMuscat and ahlibank. “Banking sector will show its dominance in the primary market. Bank Nizwa will absorb the market liquidity fi rst,” said a market analyst.

There will be a strong retail participation in Islamic bank issues because of Islamic flavour.