26 June 2016
Muscat - The Capital Market Authority (CMA) has asked companies listed on the Muscat Securities Market to disclose the amount of impact, if any, from Britain's vote to exit from the European Union. "Owing to the impact on the global financial markets, commodity prices and exchange rates caused by Brexit, all joint stock companies are urged to immediately disclose any current or potential exposure on their financial position", a circular issued by Abdullah Salim Abdullah al Salmi, Executive President of CMA said. The companies have also been asked to disclose the impact, if any, on their price on the market pursuant to the terms and conditions issued by the regulator under the capital market law.

But analysts are of the opinion that the Brexit outcome will have very limited effect on Omani companies. "Companies and banks with pound exposure may have some impact as it is transmitted through currency markets", said Joice Mathew, Senior Manager at United Securities. The Brexit vote has led to sterling reversing its gains to leave the pound down more than 10 per cent at $1.33 -- the lowest since 1985. The pound was down more than 7 per cent against the euro. "Depending on how long such currency weakness lasts could significantly impact on tourist flows to Oman, which is already affected by the weakness of other currencies such as the Russian rouble and Chinese yuan", Joice said.

Analysts are also of the opinion that the impact on the equities on Muscat Securities Market may be short-term. "Not only the local bourse, markets in the entire GCC will witness a volatile trend for few days amid prevailing global uncertainties and the risk aversion trend among the investors", said a report from Gulf Baader Capital Market. On Sunday, the MSM30 Index was down with a loss of 0.60 per cent to reach 5,762.190 points. State-owned Telecommunication company Omantel was the only gainer during the trading dominated by thin volume. Crude oil prices have so far shown only a modest impact from the Brexit contagion.

Brent crude futures for the nearest contact to delivery were down by just over $2 per barrel or about 4 per cent compared with the previous close.
In both dollar and percentage terms the price move was about two standard deviations compared with all one-day price changes since 1990. Far larger moves have been common in oil markets which suggests traders see the impact from the vote as relatively limited, at least for the time being. Britain consumes less than 1.6 million barrels of oil per day, 1.6 per cent of the global total, and the country's consumption has been static or falling since 2005. On the other hand, investments into certain areas look more attractive.

"Investments into the UK may begin to look much more attractive considering the exceptionally weak sterling levels that might be seen, representing something of a once in a life time opportunity to purchase UK assets", said Tim Fox, chief economist of Emirates NBD in a note. Significant volatility in currency markets is expected in the coming days, which would also likely have a bearing on other asset markets such as property and commodities, as well as on global monetary policy settings, all of which would have an impact, he added.

"A silver lining today is that those eyeing up a London residential asset will find it 31 per cent cheaper than it was during the last market peak in the third quarter of 2007, suggesting that we may be on the cusp of seeing a significant resumption in property investment activity in the British capital", said Faisal Durrani, head of research at Cluttons. A recent Middle East Private Capital Survey shows that global investors seek out safe haven assets such as gold and London's bricks and mortar. "The longer term implications are too early to assess, but we may start to see the unlocking of London's stalled residential property market, with investors both exiting and entering the market as we head towards a period of demand volatility," he added.

© Oman Daily Observer 2016