Declining streak continue in Muscat bourse

The sectoral index performance was mixed during the year

  
Image used for illustrative purpose only. An investor works on his computer on the trading floor of the Muscat Securities Market (MSM) in the Commercial Business District of Ruwi in Muscat

Image used for illustrative purpose only. An investor works on his computer on the trading floor of the Muscat Securities Market (MSM) in the Commercial Business District of Ruwi in Muscat

REUTERS/STR New

Muscat: The declining streak in Muscat Securities Market (MSM) continued during 2020 as the MSM 30 index declined for the fourth consecutive year despite seeing marginal recovery towards the end of the year, according to a new report.

“The index started the year on a positive note with consecutive gains during the first two months. However, the COVID-19 led decline during March-2020 pushed the index down 16.5 per cent during the month,” the Kuwait-based Kamco Invest said in its latest report.

The trends remained largely positive for the rest of the year but the consecutive declines in September-2020 and October-2020 resulted in an 8.1 per cent decline by the end of the year with the index closing at 3,658.8 points, Investment, Strategy and Research firm added.

The sectoral index performance was mixed during the year. The Services index once again witnessed the steepest decline among the three indices after falling by 16.1 per cent during the year followed by the Industrial index with a decline of 11.0 per cent. These declines were partially offset by 2.1 per cent gains for the financial index.

Total equity market cap for the exchange stood at OMR6.43 billion at the end of 2020 as compared to OMR 6.6 billion in 2019, registering a decline of 2.4 per cent. Share performance for the regular market was heavily skewed towards decliners that included 11 stocks as compared to 6 gainers during the year.

Trading activity continued to decline for the fourth consecutive year and was across the markets including regular and parallel market stocks. Total value traded during the year declined by 39.4 per cent to reach OMR400.7 million in 2020 as compared to OMR662 million in 2019. Volume traded also declined during the year but at a slightly higher rate of 40.9 per cent to reach 2.3 billion shares as compared to 3.9 billion shares during 2019.

The share of Regular Market stocks in terms of total value traded increased in 2020 to 60.3 per cent as compared to 56.6 per cent in 2019.

In terms of the type of investors, Omani’s were net buyers during the year and reported an even higher share of the total value of buy trades at 78.7 per cent in 2020 as compared to a share of 64.5 per cent in 2019. On the other hand, the share of GCC investors in the value of buy trades declined from 26.7 per cent in 2019 to 12.4 per cent in 2020, the Kamco Invest report said.

GCC equity markets

GCC equity markets underperformed their global peers and witnessed mixed performances across individual stock exchanges in the region. The aggregate MSCI GCC index reported a yearly decline for the first time in five years and was affected by twin dilemmas during the year, the Kamco Invest report said.

On one hand, governments had to impose COVID-19 restrictions that resulted in one of the most severe impacts on the economic front with an expected 2.7 per cent decline in gross domestic product (GDP) rates for the GCC region, as per the International Monetary Fund (IMF).

On the other hand, the decline in demand for crude oil, the biggest revenue source for the GCC governments, resulted in the historic slide in prices to reach a three-decade low at its lowest point in the year.

Volatility in the GCC equity market was the highest in four years with 49 days when the markets moved more than one per cent during the year as compared to 37 days in 2019. Almost all the markets in the GCC were in the red in terms of year-to-date (YTD) returns for the bulk of the year and recovered only during the fourth quarter of 2020.

Saudi Arabia recorded the best equity market performance during the year reporting gains for the fifth consecutive year at 3.6 per cent.

On the other hand, Kuwait, which was the best performing market in 2019, reported the biggest decline as investors booked profits after last year's gains that was led by the announcement of the MSCI EM inclusion.

The movement in oil prices during the year was especially reflected in the performance of the Saudi market, in addition to a passive impact on other markets in the region.

The decline in oil revenues resulted in fiscal pressure on GCC governments and the additional spending associated with COVID-19 resulted in record deficits.

Debt issuance in the region was at a record high as well. Also, the culmination of fiscal pressure and over-dependence on oil resulted in downgrades of four out of six sovereigns in the region.

In terms of sector performance, more sectors in the GCC witnessed gained during the year, however, a decline in large-cap sectors more than offset these gains.

On the gainers' side, the Consumer Durable & Apparel index witnessed the highest yearly returns of 86.1 per cent benefiting from the sustained demand despite the lockdowns due to the inelastic and non-cyclical nature of the stocks in the index.

A similar impact was seen on the Food & Drug Retail sector that posted the second biggest returns during the year at 56.2 per cent after being the best performer in 2019.

Healthcare-related indices also recorded gains of more than 40 per cent, whereas the Food & Beverage index was up 28.8 per cent. On the other hand, the banking index was the biggest decliner during the year sliding by 5.5 per cent followed by 2.4 per cent decline in the Real Estate index. Energy and Diversified Financials sectors reported declines of 1.9 per cent each, the Kuwait based company said in its latest research.

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