Oman Sovereign Fund Boosts Buying Of Local Stocks

Oman’s State General Reserve Fund (SGRF) has boosted its buying of shares in the local stock market as prices have slid to attractive levels, the fund’s executive president said.

The Muscat Securities Market’s (MSM) main index is down 20 per cent from its November peak, hit by concern that the plunge in global oil prices will crimp government spending and therefore corporate profit growth.

The government has already revealed plans to raise money by cutting natural gas subsidies for industry, and is considering a range of other spending cuts and tax rises.

“For the last three to four weeks we have been investing in MSM at higher volumes. Not as a government, but as an investment firm seeking and seizing opportunities,” Abdulsalam Al Murshidi told Reuters at the end of the past trading week.

The SGRF is Oman’s largest sovereign wealth fund and has assets totalling about $13 billion, according to an estimate by the Sovereign Wealth Fund Institute, which studies the industry.

“It is part of our mandate to look internationally for new opportunities for investment. With the decline in share prices locally, and by studying the market fundamentals, we have seen an attractive investment waiting to be tapped,” Murshidi said.

“Hence we started investing some of the fund’s available liquidity. SGRF has the appetite to invest its whole local-investment allocation and more when large corporations and companies are undervalued.”

The stock market’s drop will soon be reversed, Murshidi predicted, as the government announces its 2015 budget in coming weeks and continues spending on major infrastructure and strategic economic projects.

Ahmad Al Marhoon, director-general of the MSM, said the government had “no intention to intervene and control the market”.

Recalling past cases when Omani share prices stumbled because of international crises, he said: “We have been in this situation before. The government didn’t intervene then, and there is no need to do so now either. It is an opportunity for investors.”

He added, “The current drop in the share prices is not unusual. People tend to lose trust during crises, and start selling their shares out of unjustified fear. But others see it as an opportunity to buy at lower prices.”