Opportunity In Adversity

A diversified portfolio spread across developed and emerging markets, careful stock selection and an ability to stay invested for a couple of years can earn investors high single digit returns. Mayank Singh reports.

- Mayank Singh

Oman’s real GDP growth per capita in 2016 was a negative 4.2 per cent, in 2017 this is expected to further go down by 1.4 per cent. This is largely the result of the weakness in oil prices which averaged $39 per barrel in 2016 against an estimated budgetary price of $45 per barrel. Though oil prices have increased since 2016, they continue to trade in the $46-$55 per barrel range. This economic weakness is reflected on the Muscat Securities Market with the MSM 30 index plummeting year to date (YTD) by 6.14 per cent in the second week of June 2017. The downturn has cast its shadow across various sectors with the industrial index going down by 1.41 per cent and the services index by 10.42 per cent. The financial index was the only one bucking the trend with a 5.33 per cent rise.

Given the prevailing economic situation, investors are at a loss on investment options, asset choices and allocation. Says Mustafa Ahmed Salman, chairman and CEO, United Securities, “The investment climate in the GCC is not very clear because of the instability in oil prices. We also see pressure from global ratings agencies such as S&P, Moody’s and Fitch on the GCC and their low rating is dissuading international investors from coming to the region. In the GCC we have traditionally had two main investment options – real estate and stock markets. Liquidity is bad across regional markets and the stock markets have been affected in a big way, with regional indexes being down by three to 10 per cent, with some major stocks plummeting by a huge margin.”