MSX30 Index declines 7.1% in 2023

MUSCAT: Oman's benchmark stock market index, the MSX30, ended 2023 with a 7.1% decline, largely burdened by the global oil price slump. However, two major initial public offerings (IPOs), improved non-oil activity, and increased foreign investor participation offered glimmers of hope for the future.

The MSX30 Index closed 2023 down by 7.1% year-on-year (YoY) at 4514.07, while the MSX Total Return Index was down 3% to close the year at 5,950.08. The Index closed the year in negative territory breaking the trend of the last two years.

The oil price downslide was the main culprit behind the MSX30's lackluster performance. The index had scaled impressive heights, reaching a 43% high in March compared to its March 2020 low, but the oil slide sent it on a downward spiral for the rest of the year.

Financial and industrial sectors bore the brunt of the downturn. The financial index, despite improved financial records from major banks, dipped by 6.5% due to lingering uncertainties in the global financial landscape. The industrials index, grappling with supply chain disruptions and rising input costs, plummeted by a significant 14.8%.

In contrast, the services sector emerged as a beacon of relative resilience, dipping only 3.2%. Notably, Omantel and Abraj Energy, with their strong performances, were the standout performers in this sector.

Beyond the headline index, encouraging developments emerged. Real GDP growth, while expected to be lower than previous years at 1.2%, showcased signs of progress in non-oil activity. Oman's credit rating upgrade by Fitch to BB+ further bolstered investor confidence.

Market activity also painted a somewhat optimistic picture. Turnover on the MSX surged by 20.5% to RO 1.13 billion, driven by equity trades, IPOs, and increased daily and monthly average volumes. Additionally, the MSX's proactive initiatives to enhance market liquidity and attract foreign investors, including international roadshows and conferences, contributed to this positive trend.

Furthermore, analysts remain optimistic about the Omani market's long-term prospects due to its attractive valuations. The low price-to-earnings (PE) ratio, high dividend yield (4.9%, making it one of the highest in the GCC region), and low price-to-book (PB) ratio all suggest potential for future growth.

“Going into 2024, the Omani stock exchange is expected to move in an upward trajectory, given the expectations that the country’s economy will improve further, supported by Government reform initiatives under the Medium-Term Fiscal Plan (MFTP) as well as elevated hydrocarbon prices. The International Monetary Fund (IMF) has forecasted Oman’s real GDP to grow by 2.7% in 2024e vs. 1.3% in 2023e and 3.1% in 2022,” Ubhar Capital said in a report on the bourse’s performance.