05/11/2014 05:16 AST
Share values on the Muscat Securities Market (MSM) witnessed a sharp fall, when the bourse plunged by 1.27 per cent or 89.18 points to close at 6919.84 points, triggered by a fall in oil prices.
The market sentiment was weak, mainly due to falling oil prices and negative trends in regional markets. The fall in share prices was triggered mostly by sentiments, rather than fundamentals of the regional economies or the corporate sector.
"It (the fall in share prices) was mostly due to sentimental factors. Factors like a fall in oil prices and negative trend in Gulf Cooperation Council (GCC) markets like Saudi Arabia, Dubai, Abu Dhabi, Kuwait, Bahrain and Qatar," said Kanaga Sundar, head of research at Gulf Baader Capital Markets.
Investors dumped stocks across the Middle East, on serious concerns that the falling oil prices will affect hydrocarbon-based economies in the Gulf region.
All major markets in the region plummeted on Wednesday with Dubai bourse falling by 3.26 per cent, Saudi by 2.67 per cent, Abu Dhabi 2.41 per cent, Qatar by 1.96 per cent, Kuwait by 1.37 per cent and Bahrain by 0.17 per cent. "The volatility will continue until clarity emerges on oil price stability," added Sundar.
Echoing a similar view, S. Suresh Kumar, head of research at Al Maha Financial Services, said that projections on a further fall in oil prices in the coming months is also affecting the market sentiment. "The negative sentiment is likely to continue until some positive signs come through."
Suresh Kumar pointed out that Oman has the ability to borrow fund from overseas market for raising funds for projects as the country's debt to GDP ratio is below five per cent.
The daily trading volumes are slightly higher than that of last year. As many as 19.71 million shares changed hand, which generated OMR10.28 million turnover on Wednesday.
Suresh Kumar also said that foreign institutional investors were mostly net buyers since the fall started on MSM, except on Wednesday.
Major losers on Muscat bourse were United Power, Al Madina Investment, Gulf Investment Services, Al Hassan Engineering, Al Maha Ceramics and Al Anwar Holding.
Dubai's stocks fell the most among global markets as Brent extended losses and Saudi shares slid following the death of two security personnel who were killed in nationwide arrest raids after an attack in the oil-rich east.
The benchmark DFM General Index slumped 3.3 per cent, the most since October 16, to 4,398. That's the steepest drop among 93 gauges tracked by Bloomberg worldwide so far on Wednesday. Saudi Arabia's Tadawul All Share Index, the Arab world's largest bourse, decreased 2.9 per cent to the lowest since April, taking a two-day decline to 6.3 per cent.
"The markets are reacting to the continued decline in oil prices because their economies are highly dependent on oil," Tariq Qaqish, the head of asset management at Dubai-based Al Mal, said by phone from Dubai. "Also, the drop in Saudi Arabia's market, which is the biggest in the region, is affecting the sentiment throughout the Gulf. If you couple this with security concerns in the region, you get this selloff."
Times of Oman
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