Omani stock market faces second week of losses amid rate cuts

Muscat: The Omani stock market concluded its weekly performance with a decline of 0.43 percent, marking its second consecutive week of losses, according to an industry expert.

“Throughout the week, markets across the region remained cautious until the Federal Reserve announced a rate cut of 50 basis points, a move followed by most central banks in the region,” said Mazen Salhab, Chief Market Strategist MENA, at BDSwiss.

“The Central Bank of Oman (CBO) also reduced its repo rate for local banks by 50 basis points (BPs) to 5.50 percent. While this had a limited immediate impact on the Omani stock market compared to other regional markets, potential future implications remain,” he added.

“The resurgence of geopolitical tensions could negatively affect market sentiment, and a rebound in oil prices is seen as limited and unsustainable, which may further pressure market performance,” he further pointed out.

The rate cut aims to maintain the fixed exchange rate system and stimulate economic growth by making borrowing cheaper, said Mazen Salhab. “This is expected to encourage investment and consumer spending, potentially boosting sectors like tourism, manufacturing, and real estate. Additionally, the rate cut supports Oman's efforts to diversify its economy away from oil dependence by accelerating growth in the non-oil sectors,” he further added.

Sectoral performance during the week mirrored last week's movements. The Industrial Sector was the hardest hit, with a decrease of 1.32 percent. Notable declines were seen in Al Anwar Ceramic, which dropped by 3.33 percent, Oman Chromite by 1 percent, and Galfar Engineering and Contracting by 2.29 percent.

The services sector fell by 0.29 percent. Within the telecommunications industry, Ooredoo saw a decrease of 1.41 percent, and Oman Telecom fell by 0.60 percent. Renaissance Services also experienced a slight decline of 0.25 percent.

The financial sector performed almost neutrally, with a minor decrease of 0.09 percent. The National Bank of Oman (NBO) declined by 0.36 percent, and Bank Nizwa fell by 0.93 percent. However, there were some positive performances, with Dhofar International Development & Investment rising by 3.48 percent, and Sohar International Bank increasing by 1.46 percent.

“Despite recent challenges in the Omani stock market, the country's trade figures show promising signs that could influence future market performance,” said Mazen Salhab.

By June 2024, Oman's trade balance recorded a surplus of OMR3.658 billion, reflecting robust export growth of 6.7 percent. The 5.3 percent increase in oil and gas exports could boost energy sector stocks, while the 8.1 percent rise in non-oil exports supports ongoing efforts to diversify the economy, he further added.