Oman shares hit a new low

The Muscat Securities Market hit a seven-year low at the end of last week, closing at 148.49 points, although by the middle of this week the bourse had staged a modest recovery to 151.38 points. But just how much lower can the MSM go?

All the other Gulf stock markets have posted very credible performances this year despite the hiatus surrounding the tragedy of September 11. Oman remains the exception to the rule, and its bourse has lost a quarter of its value so far in 2002.

Last week's fears about bad loan provisions left the bears roaming the market again. Analysts appeared to have woken up to the fact that Omani banks have been rather too keen to extend loans in the past, and will now have to pay for past errors.

Thus shares in Bank Muscat slid 530 baisas last week to 1.720 rials, and the National Bank of Oman fell 60 baisas to 1.350 rials. The Oman International Bank also lost 140 baisas to 1.110 rials.

Ever since the MSM took the dubious honour of being the best performing emerging market in 1998, things have gone from bad to worse to absolutely awful. A contrarian would say that this must be a buy signal.

For Oman is not really having a bad time. Its economy is buoyed by two years of excellent oil and gas revenues, and Oman remains a friendly, stable country. What is lacking is investor confidence in good business practice.

Perhaps that is something that only time can cure, although recent auto sales figures suggest that Omanis are spending money and that must be a good sign. A bold investor might stash away the blue-chips at these prices and wake up considerably richer in a few years' time.