Oman bourse, other Gulf stock markets fall as oil prices slide

01/12/2014 01:16 AST

Muscat Securities Market (MSM) witnessed the biggest fall in share index among Gulf bourses, when the general index fell sharply by 6.21 per cent or 430.89 points to close at 6,505.99.

Oman crude oil prices touching a five-year low at $69 per barrel is cited as the major reason for the severe fall, although the recent rise in natural gas prices also affected the market sentiment. Opec on Thursday maintained its output ceiling unchanged despite sliding crude prices.

Local bourse witnessed one of the biggest falls in a single session in more than three years amid weak investor sentiment.

"The fall in oil prices will affect Oman severely. Another factor is an increase in natural gas price, which will affect several industries, especially cement sector," Mustafa Ahmed Salman, chairman and chief executive officer of United Securities told Times of Oman.

Salman also noted that the Majlis Al Shura also suggested for increasing the royalty paid by telecommunication service providers, which will affect net earnings of the companies. "All these measures are affecting the market."

Suresh Kumar S, head of research, Al Maha Financial Services, said that non-Omani investors were net sellers, while Omani investors were net buyers on the local market.

All other stock markets in the Gulf region plummeted on Sunday with Dubai bourse falling by 4.74 per cent, Saudi by 4.72 per cent, Qatar by 4.28 per cent, Abu Dhabi by 2.64 per cent, Kuwait by 3.35 per cent and Bahrain by 0.58 per cent.

Dhruwa Mittal, head of research, Shurooq Securities Company, said that Oman government has been taking measures to find alternative sources of revenue, which include a revision in natural gas price and a proposal to raise royalty paid by telecommunication service providers.

Every $5 fall in crude price will result in a revenue loss of OMR560 million for Oman government, noted Mittal. Mittal noted that the oil price may hover around $65-70 per barrel till the year-end.

"It is quite likely that the market will further decline. We do not see any immediate positive factor for the market to bounce back," added Suresh Kumar. Mittal also said that the industrial sector will be affected due to an increase in natural gas price. "We need to wait and watch whether they will be able on pass on the additional cost to consumers."

Salman of United Securities said that the new law on monopolies is another matter of serious concern for the investor community as it may restrict operations of large corporate houses, which have sizable shares in the market.

Times of Oman