MSM to turn bullish this year: Survey

10/01/2011 00:00 AST

An overwhelming majority of local stock market participants is confident of a steady economic growth and a firm trend on the Muscat Securities Market (MSM) this year, on the back of a robust oil revenue and increased government spending on infrastructure, according to a survey report titled ‘Oman Economy and Market Outlook – 2011’.

The survey was conducted by Gulf Baader Capital Markets among 48 local participants, who included brokers, fund managers, analysts and institutions, during the last week of December 2010.

The survey found that the economy will continue to grow at a steady pace this year. “About 56 per cent of the participants expect Oman’s nominal gross domestic product (GDP) growth rate to be about 5 per cent to 7 per cent this year,” said the report, which was jointly prepared by research analysts Kanaga Sundar and Vijay Sridharan.

As many as 21 per cent of local market players anticipate GDP growth in the region of 9 per cent to 11 per cent, while another 17 per cent expect GDP growth in the region of 7-9 per cent.

Economic recovery

The Gulf Baader survey also revealed a market consensus for inflation to stay about 5 per cent. An overwhelming 65 per cent of the survey population expect Oman’s inflation to stay between 3 per cent and 5 per cent, while another 33 per cent expect inflation to be about 5-7 per cent.

On the MSM outlook, the respondents believe that macro economic factors along with infrastructure spending to drive local equity markets. As many as 41 per cent of respondents believe that government spending and economic recovery are the key drivers for MSM, while 32 per cent expect the trigger in the form of earnings growth in MSM listed companies.

“While 16 per cent believe that the market may witness improved liquidity thereby going for re-rating in 2011. About 11 per cent anticipate that the uptrend in oil prices to trigger performance in MSM.”

On the growth in MSM general index, over 60 per cent of the participants expect the MSM index to trade between 6,501 and 7,500 points this year, while another 32 per cent expect the benchmark index to breach 7,500-level. “Only 8 per cent of the respondents foresee that the benchmark index to trade between 5,501-6,500 level.”

The Gulf Baader survey also showed that about 47 per cent of the respondents foresee the global economic showdown to put pressure on equities.

As many as 34 per cent anticipate the Euro Zone concerns and sovereign debt default to be a key apprehension for 2011. The survey also revealed an increasing preference among local investors to shift to equities during the current year.

For more on this Click Here

Oman Daily Observer