Muscat Securities Market to allow margin trading

30/08/2011 00:00 AST

Oman plans to allow margin trading in stocks, a move that may boost volume on the Muscat Securities Market.

The main aim of the move is to “offer more tools for investors,” Sulaiman Mohamed al Rashdi, deputy general manager of the exchange, said in a telephone interview from Muscat on Monday. The decision will become effective after it’s announced in the Official Gazette next month, al Rashdi said.

The Muscat Securities Market has a market value of $17.4 billion, making it the second smallest in the Gulf after Bahrain.

The average daily trading volume on Oman’s bourse over the past 12 months was 10.3 million shares, according to data compiled by Bloomberg. That compares to 124 million shares in Dubai and 75.6 million in Abu Dhabi, the data show.

“Regional and international investors shy away from markets that don’t have enough liquidity,” said Tariq Qaqish, deputy head of asset management at Dubai-based Al Mal Capital. “With margin trading allowed in Oman, short-term investors and speculators would see this as an opportunity to trade with higher capital and increase the potential returns.”

Investors and brokers however will need strict guidelines to ensure that they don’t wipe out their capital, he added.

The benchmark MSM30 Index gained 1.2 per cent at 11:22 a.m. in Muscat today, paring the drop for the year to 15 per cent. That compares to a decline of 10 percent in the regional Bloomberg GCC 200 Index.

The average daily trading volume on Oman’s stock exchange over the past 12 months was 10.3 million shares, according to data compiled by Bloomberg. That compares to 124 million shares in Dubai and 75.6 million in Abu Dhabi, the data show.

Bloomberg