09/11/2015 08:05 AST
Omani bourse behaved differently from other regional markets with a gain of 2.4 per cent in October, mainly due to better corporate earnings in the third quarter.
Stock markets in the Middle East and North Africa (Mena) region ended mostly in the red in October 2015 although global markets posted strong gains during the same period, said the Kuwait Financial Centre in a study.
A market analyst said Muscat bourse witnessed a marginal recovery in October, mainly due to two reasons: better corporate earnings and the fact that most of the shares had declined to very attractive levels, which helped the investors to re-enter the market.
The traded volumes on the market, excluding some bloc deals, were limited, which showed that risk aversion continues to prevail.
Abu Dhabi suffered the most, followed by Saudi Arabia, Dubai and Bahrain. “Despite the slight increase in oil prices during October, the overall drop in oil prices continues to strain the Mena markets. The regional markets are also responding to instability in the global economy and governments' monetary tightening in response to low oil prices,” noted the study.
As far as year to date performance is concerned, almost all Mena markets declined with Muscat bourse losing 6.7 per cent, Saudi plunging 16.5 per cent, Dubai falling 8.6 per cent, Abu Dhabi declining 5.9 per cent, Kuwait losing 11.7 per cent, Qatar losing 6.9 per cent and Bahrain sliding 12.3 per cent.
Saudi Arabia is contemplating spending cuts and tax increases to manage its fiscal deficit.
Apart from Oman, Egypt and Qatar markets gained in October. Kuwait’s price index ended the month of October with a marginal gain of 0.9 per cent. On the contrary, Kuwait's weighted index remained stagnant.
Global equities ended the month of October with strong gains after a sharp fall in August and September, which was fuelled by fears over the global slowdown, with China as the epicentre. Oil prices rose after the United States oil rig count fell for the ninth straight week, indicating potentially lower crude output in coming months in the face of a global supply glut. Subdued worries about slowing Chinese growth, proactive approach of rate cuts by China to stimulate the economy and investor’s positive response to US Federal Reserve continued to keep interest rates low and the European Central Bank's further easing measures are some of the key reasons that fuelled the rally of the Global equity markets in October.
Markaz report also said that Mena markets' liquidity gained some momentum in October, with volume increasing by 12 per cent and value traded by 14.2 per cent, post the lulled market activity. However, Abu Dhabi, Dubai and Bahrain were a few exceptions where the trading activity declined.
Morocco showed the most improvement with value traded increasing by 33.3 per cent and volume traded increasing by 58 per cent. With the value traded declining by 79 per cent and volume by 68 per cent, Bahrain’s market liquidity was worst hit.
Saudi Government is actively pursuing several initiatives to keep its fiscal budget deficit in check. Saudi Arabia is considering raising domestic fuel prices; the existing system of subsidies in the Kingdom is blamed for waste and surging fuel consumption. Saudi Arabia's government was in talks with local banks to sell them 20 billion riyals ($5.3 billion) of local currency bonds.
Times of Oman
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