MUSCAT: Muscat bourse lagged behind other regional stock markets in terms of performance in the second quarter of this year, mainly on account of change in valuation, corporate performance and liquidity.
Among seven stock markets in Gulf Cooperation Council (GCC) countries, five bourses were in positive territory, while two markets lost ground in the second quarter.
Muscat bourse edged up 2.99 per cent to 6,424.60 in the three month period ending June, 2015, while Dubai, Abu Dhabi, Qatar and Saudi Arabia surged ahead by 16.3 per cent, 5.7 per cent, 4.18 per cent and 3.52 per cent, respectively. Kuwaiti and Bahraini markets were the only two GCC bourses to lose ground. Bahrain and Kuwait declined by 5.66 per cent and 1.26 per cent, respectively, in the second quarter of 2015.
Following a strong market correction that was triggered by the drop in oil prices late last year, and that extended well into the first quarter of 2015, most regional markets saw a notable rebound in the second quarter. Markets seem to have gained from stabilising crude oil prices and a relatively calmer geopolitical climate.
“Higher oil prices in the second quarter of 2015 along with Saudi Arabia opening its market to foreigners helped in improving the investor sentiment in the region. Saudi Arabia and Dubai are among the more liquid markets in the region having a higher investor base,” said Dhruwa Mittal, head of research, Shurooq Securities Company.
According to Mittal, three major factors that will influence the market trend in the immediate future are the proposed Iran-US deal, developments on Greece debt deal and how the recent crash in the Chinese Stock market which eroded 33 per cent of market value in a fort night due to stretched valuations will spread to other emerging markets is to be seen. Lifting of sanctions on Iran will bring in more oil to the market keeping oil prices under pressure.
Suresh Kumar, head of research at Al Maha Financial Services said that the most important factor that is going to influence the market trend would be oil price. He added that crude oil production of Opec countries is the highest now and US output is also growing.
Suresh Kumar said that majority of regional markets outperformed their counterparts in the US and Europe in the second quarter.
As far as Oman bourse is concerned, he said the growth in profitability of listed companies is not very promising, which is a major factor in determining the market trend this year. There could be a range bound move, with a negative bias.
In the coming months, regional markets are likely to continue to be focused on oil price developments. Oil prices remain an important factor, especially for the economies with weaker fiscal positions. Other markets with larger fiscal buffers are likely to see more limited impact of large changes in oil prices. In those markets, such as Saudi Arabia, Qatar, Abu Dhabi and Kuwait, the economies appear more resilient in the current low oil price environment, as governments renew commitments to boost or maintain capital spending and are determined to move forward on their development plans.
The MSCI GCC total return index was up 4.6 per cent. GCC markets’ capitalisation stood at $1.1 trillion, having added $88 billion by the end of second quarter of 2015.
