Oman equities' losing run continues

Riyadh - The MSM30 Index slipped for a 19th day to the lowest in almost 12 months.

Omani stocks extended their longest losing streak on record after the price of its main source of income sank.
The MSM30 Index slipped for a 19th day to the lowest in almost 12 months as the sultanate faces another year of shrinking government revenue. Standard & Poor's cut the nation's credit rating after the drop in oil prices led to a bigger fiscal deficit than expected, while parliament members debating next year's budget warned of "extremely difficult circumstances".
Oil and gas accounted for about 85 per cent of government revenue last year in Oman, a key US ally that faces Iran across the Strait of Hormuz. The nation will post a current account deficit of about 17 per cent of economic output this year, the widest in the six-nation GCC, according to International Monetary Fund estimates.
While Oman isn't the only Gulf country to be stretched by the oil rout, it has thinner fiscal buffers than neighbouring Saudi Arabia and the UAE.
"Given the vulnerability of Oman compared to other GCC countries, regional and international investors are reducing positions or are becoming extremely selective," said Abu Dhabi-based Sachin Mohindra, a money manager at Invest AD Asset Management.
"Bad economic news is translating into poor earnings growth, and that is what investors are reacting to," he added.
Muscat's MSM30 Index fell 1.7 per cent on Monday, the most in three months, extending its drop since November 3 to 6.7 per cent. Contracts used to speculate on the Omani rial's exchange rate in the next 12 months climbed about 30 per cent in the same period to 900 basis points as of 1:29pm in Muscat, the highest in more than two months on a closing basis.
The collapse in crude prices meant the circumstances surrounding Oman's budget review were "extremely difficult", Saleh bin Saeed Masan, the president of the economic and financial committee in the Shura Council, Oman's elected advisory body, said in a statement to state-run Oman News Agency on November 23.
Gross domestic product will probably expand 3.5 per cent in 2015, according to the median of seven economist estimates compiled by Bloomberg, compared with an average of 4.5 per cent for the previous five years.
Some of the measures the government is taking are positive, and "we believe it will put them on a much sounder footing in the longer term," said Bassel Khatoun, the Dubai-based chief investment officer of Middle East and North African equities at Franklin Templeton Investments (ME).

• Oman