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Against the belief that business slows down during the holy month of Ramadhan, the Muscat Securities Market proved that the bourse is emblematic of the type of activity that remains steady.
The MSM30 Index gained 3.5 per cent till last week since the fasting month began on June 19. The benchmark index closed 7,203.87 points on Thursday, which is a five-year high. The gains support the study by JedrzejBialkowski of the University of Canterbury, Ahmad Etebari of the University of New Hampshire and Tomasz Piotr Wisniewski of the University of Leicester.
The scholars found that there was less market volatility during Ramadhan than in the rest of the year, while liquidity levels remained steady and returns were, in most cases, higher. The study made on 14 Muslim countries including the six GCC states found that 11 of them had higher average returns during the month compared to the rest of the year.
“Besides fasting and prayers, Ramadhan promotes heightened social awareness. As a fundamental shared experience, Ramadhan brings about a sense of solidarity among Muslims, enhances their satisfaction with life and encourages optimistic beliefs. This optimism affects investor sentiment and decisions leading to the price run-ups we report in this paper,” the study says.
Banking and financial sector led the gains on the Muscat Securities Market during the period with a gain of 3.7 per cent followed by the service sector with two per cent.
While industries sector made only marginal gains. MSM30 Index Market Capitalisation as at the end of the day stood at RO 7.730 billion
Banking sector shares continue to be the favourite pick of the investors.
Majority of the banks showed double digit growth with higher earnings.
“Re rating in valuations coupled with improvement in performance of leading banks resulted in the rise in their stock prices”, says Suresh Kumar, Research Head at Al Maha Financial Services.
MSM Sharia Index has also been performing well. On Thursday the index closed at 1071.34 points. A total of 26.157 million shares were traded during the day amounting to an aggregate turnover of RO 8.562 million. Omani bourse has been the best performing GCC market during June 2014 with new listings, higher fund flows from both the local and foreign institutions, market liquidity and on valuation attractiveness.
Analysts are optimistic that corporate earnings will improve during 2014 amidst steady growth and strong earnings from the financial sector.
According to Gulf BaaderCaptial Markets estimates, the first half total revenue of MSM30 Index companies excluding investment holding companies will be around RO 1.697 billion, with an increase of 1.3 per cent on a year on year basis led by higher single digit growth in banking and financial sector companies.
MSM30 Index constituents earnings excluding investment holding for the period is estimated at RO 302.3 million, a decline of 1.6 per cent on a year on year basis amid prevailing higher base.
In the regional markets, Qatar’s bourse added 0.84 per cent to close on Thursday at 13,284.65 largely on the bank of Islamic lender, Masraf Al Rayan, which gained 1.69 per cent. Across the borders, markets weren’t very different as the Saudi benchmark index is trading in a downtrend, closing at 9,786 on Thursday.
Saudi Arabia’s market capitalisation of more than $500 billion is larger than the UAE and Qatar combined.
In Kuwait, the market closed at 7,097— a 0.21 per cent drop. Gulf Finance House, which is also listed in Kuwait, showed signs of strong trade as it accounted for over 12 per cent of the total value of trade.
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