Muscat: The shock waves of the global economic downturn arising out of the pandemic and slump in oil prices have also had an impact on the Muscat Stock Exchange (MSX).
The MSX30 Index comprising of 30 companies from the three major sectors, financial, service and industrial, slumped lowest in six years to a value of 3,383 points in April 2020, a 17.5 per cent month-on-month drop from 4,101 points in March 2020.
However, as we have witnessed, the effects of the pandemic fade with life and business returning to normalcy, the MSX30 too has shown resilience and recovery. The index has since then grown 17 per cent to 3,955 points in October 2021.
Similarly, the MSX Shariah Index, constituting of Shariah compliant companies, too witnessed growth in the post pandemic era. The Index grew 17 per cent to 577 points in October 2021 versus 492 points in April 2020.
Looking at the sectorial indices, the financial index, following the MSX30 trend, dropped to 5,371 points in May 2020. The lockdowns imposed by the government to curb the spread of coronavirus in 1H21 further impacted the index, touching 5,249 points in February 2021.
Nevertheless, the financial index has shown resilience since the opening up of businesses and has climbed 20 per cent in eight months to 6,293 points in October 2021.
The lockdowns in 1H21 and slow growth of the economy along with a steep decline in worldwide tourism majorly impacted the service index, valuing at 1,534 points in March 2021. The index has grown 10 per cent since then to 1,680 points in October 2021.
The industrial index too witnessed a slump in April 2020 to 3,834 points.
However, of all the indices, the industrial index has witnessed the highest growth of 62 per cent to 6,199 points in October 2021 since the lows of the 2020. The growth is attributed to businesses and industries returning to normalcy along with the government’s effort to support the companies for the Oman Vision 2040.
While the MSX 30 of Oman slowly is recovering from the depths of 2020, countries in the GCC region have witnessed faster growth. The countries also benefited from rising oil prices and fast paced vaccination.
The UAE’s ADX General index has seen the highest growth in the GCC with the index growing multiple-folds to 7,787 points in October 2021 from 3,400 points in March 2020, while the DFM general index jumped to 2,790 points in October 2021 from 1,663 points in April 2020.
Qatar’s QE Index witnessed growth of 41 per cent in a year and half to 11,751 points in October 2021 from 8,310 points in March 2020, while Bahrain General Index (BHBX) recovered 37 per cent to 1,710 points in October 2021 from 1,246 points in May 2020. Saudi Arabia’s MSCI Tadawul index grew twice its value to 1,619 points in October 2021 from 814 points in March 2020.
Albeit, the growth of Oman has been slow relative to its peers, the government’s effort to vaccinate the local population as quickly as possible along with other measures implemented is aiding economic recovery.
Rising oil prices throughout 2021 have also played an important role in Oman’s recovery from the economic downturn and as a result, the international rating agency, Moody’s changed Oman’s outlook to stable from negative while S&P changed the outlook to positive from stable, both affirming the long-term ratings at Ba3 and B+ in October 2021.
The expected narrowing of sovereign debt from rise in oil prices along with planned fiscal reforms would aid in faster economic growth and the same would reflect on the MSX 30 Index.
(The writer is a Muscat-based credit analyst. Email: email@example.com)