MUSCAT: The Muscat Stock Exchange (MSX) 30 Index closed in the positive territory after having fallen for four consecutive years, from 2017 through to 2020, according to investment advisory firm Ubhar Capital (U-Capital). As is the case with its Gulf peers, the Sultanate of Oman’s economic prospects are closely dependent on oil price movements, and this correlation is also visible in the country’s stock market performance, it said.
In 2020, as the COVID-19 pandemic roiled the global economies and led to a 21.5 per cent drop in Brent crude price, th eMSX 30 Index fell 8.1 per cent year-on-year (YoY) in 2020. However, countries around the globe reopened gradually, supported partially by the vaccination drive, resulting in an economic growth rebound, amid elevated oil prices as well as improved demand outlook.
The Omani economy is also recovering and accordingly, its nominal GDP during 9M21 jumped 12.7 per cent YoY. A pickup in the economic activity has also positively impacted businesses and MSX-listed companies have registered an increase in their net profits during 9M21 on a YoY basis worth about 5 per cent, largely supported by then financial and industrial sectors. These developments have resulted in the appreciation of the MSX 30 index which rose 12.87 per cent year-on-year (YoY), said U-Capital.
“Going into 2022, the Omani stock exchange is expected to continue moving in an upward trajectory, given the expectations that the Sultanate’s economy will improve further. The International Monetary Fund (IMF) has forecasted Oman’s real GDP to grow by 2.9 per cent in 2022 vs. an expected 2.5 per cent in 2021. Continued opening of the economy, rising vaccination coverage, and stimulus and initiatives undertaken by the government in the recent past are expected to lead to an acceleration in the economic activity,” the investment advisory firm remarked.
A probable recovery in the stock market will also be conducive to the revival of Initial Public Offer (IPO) activity, says U-Capital. “While there are no public announcements yet, MSX may see more IPOs in 2022 after registering an IPO of Oman REIT Fund at the start of 2021 and another IPO of Oman Reinsurance (OMANRe) towards the end of 2021 and NIL in 2020. For instance, in July 2021, unconfirmed reports said Oman state energy company OQ is considering selling its partial/full stake in its drilling unit by floating it on MSX. Similarly, before the pandemic struck, there were talks of the government offloading its stake in some electricity distribution companies. Some of these plans might see the light of day in 2022 in case the overall economic and financial situation turns out as expected.”
