07/08/2014 08:14 AST
Shares listed on the Muscat Securities Market (MSM) peaked to the highest level in five years, pushing the MSM general index to touch 7,350.06 points amid surge in bank stocks and renewed support from both local and international investors.
The MSM 30 Index, the barometer of the market sentiment, surged ahead by 7.54 per cent since the beginning of the year – from 6,834.56 points to touch 7,350.06 points on Tuesday.
The last time the market touched this year was on October 21, 2008, when the bourse touched 7,378 points.
Market sources said that the growth in conventional banking stocks, which have a 45 per cent weightage in MSM 30 Index, aided the record surge in the market.
Banks' loan growth has translated into profit and re-writing in valuations also helped to attract investor interest in bank shares.
"Omani bank stocks, which are heavy-weights, were undervalued in the past compared to their Gulf Cooperation Council (GCC) counterparts. The MSM has one of the highest dividend yields with lowest price-earning (P/E) ratio among GCC bourses," said Tariq Abdelrazak, deputy general manager of United Securities.
"All banks have shown growth. Earnings growth of bank indicates that the economy is also growing," he further added.
Echoing a similar view, Suresh Kumar, Head of Research at Al Maha Financial Services, said banks have shown good performance in terms of credit growth and profitability. "In the last couple of years, banks were not very active. We were lagging behind other GCC markets," added Suresh Kumar. "Credit growth is expected in double digits this year."
Since the beginning of the year, almost all conventional bank stocks surged ahead to touch new peak levels.
For instance, National Bank of Oman stock shot up by 34.47 per cent Bank Sohar was up by 32.66 per cent, BankDhofar rose by 20.24 per cent, ahlibank moved up 15.93 per cent and Bank Muscat rose 13.8 per cent.
However, HSBC Bank Oman stock declined by 6.8 per cent this year.
Foreign buying is an important factor that aided the Muscat bourse to touch this level.
"There are a lot of foreign fund inflows coming to the market. We have seen OMR22 million net buying by foreigners this year," noted Joice Mathew, Head of Research at United Securities. Mathew also said that the average daily turnover for the first seven months of this year was OMR9.8 million, compared to OMR9.1 million daily turn over for the whole of 2013. However, the average daily volume (number of shares traded on the bourse) declined to 29 million shares in the first seven months of this year, compared to 32.5 million daily volume for the whole of 2013. The growth in turnover, despite a fall in volume, was due to increase in share prices, added Mathew.
Tariq said the recent initial public offerings of Oman Telecommunications Company (Omantel) and independent power producers have helped in increasing the depth of the market and investor interest.
In fact, the Omani bourse was the fifth best performing market in the Gulf region with its 18.64 per cent gain in general index at 6,834.56 points in 2013.
Times of Oman
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