09:16 am - Monday 25 May 2015

FII investment boot Muscat Securities Market (MSM)

By staff - Mon Jun 13, 10:33 am

MUSCAT: Foreign institutional investors (FIIs)are staging a comeback on the Muscat Securities Market as a proof of country’s growth story.

However, the support from foreign institutions could not trigger a major recovery on the MSM, as negative sentiments are still haunting GCC, local and Institutional investors, said market operators and analysts. Reflecting the renewed interest, the net purchase of foreign institutions on MSM stood at RO20 million between April and June 9, against a total net selling of shares worth RO40 million in the first three months of 2011.

“This means that half of their investment (stocks sold earlier) came back to the market. The participation of foreign institutional investors has increased tremendously in the last two months, mainly due to attractive valuations.

The MSM general index, the barometer of the market sentiment, this year lost 11 per cent to close at 6016.48 on June 9. There has been selling pressure from both local high net worth individuals and regional investors, indicating that risk aversion still persists.

The full impact of the increase in minimum wage and salary revision in the corporate sector will be reflected in the second quarter results.

Raise in salary
The private sector firms have to shell out additional funds following an increase in minimum salary from RO140 to RO200, RO50 allowance and a five-day week, which were introduced following Royal directive.

The corporate sector is awaiting a government decision to partially compensate their additional financial burden arising from a recent increase in workers’ salaries.

The first quarter results of listed companies were disappointing, except for banks. The Market is looking towards owing to improved Government Spending and Retail mood and confidence.

The market operators are still worried on the low traded volumes. The average daily market turnover has declined to RO2-3 million now, compared to RO6-7 million in the first quarter.

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