- Benchmark up 25% this year
- Underlying investment case ‘intact’
- Market makers triggered rally
Oman’s stock market rally should endure despite a pullback in recent weeks, with stronger corporate earnings, trading volumes and public finances all supporting bullish investor sentiment, analysts have said.
Muscat’s stock index has retreated from the record high it reached in late April. It nearly doubled during the preceding 12 months.
Yet the benchmark remains up 25 percent this year to Tuesday’s close, making it by far the Gulf’s best-performing market.
The dip since April has raised questions over whether the rally is running out of steam. Analysts said it largely reflects profit-taking rather than a deterioration in fundamentals.
“The underlying investment case for Oman remains intact,” Tahir Abbas, head of research at U-Capital in Muscat, told AGBI.
Fiscal reforms, improved government revenue, lower public debt and sovereign rating upgrades “have significantly improved the country’s investment profile”, he said.
The part-privatisations of several state-owned businesses – mainly subsidiaries of Oman’s oil company OQ – have also helped convince investors that its recovery remains on track, according to Abbas.
“Predicting near-term market direction is inherently difficult, particularly in an environment influenced by global macro uncertainty,” he said.
“But from a fundamental standpoint, downside risks remain relatively contained unless there is a significant deterioration in regional stability or a material shock to global growth or oil prices.”
The introduction of market makers, which help investors buy and sell shares more easily while improving market liquidity, was an important trigger for Oman’s equity rally, said Joice Mathew, head of research at Muscat-based investment firm United Securities.
Dwindling volumes had deterred investors from trading, causing activity to shrink further. Low bourse turnover makes price discovery more difficult, so investors had attached a price discount to Omani stocks, Mathew said.
“Investor confidence returned once we had sufficient liquidity. Now, institutional investors can buy a million shares in a blue-chip stock in a single session without impacting the price much,” said Mathew.
“Corporate profitability has also been expanding, which has helped stock prices remain at elevated levels. First-quarter results were good, with second-quarter earnings likely to be better compared with first quarter. Overall, everything fell into place for Oman over the last 12 or 15 months and it all started with the improved liquidity.”
Big increase in daily turnover
Average daily trading volumes have nearly doubled to 195 million shares this year compared with the 2025 average. Daily turnover has nearly tripled to OMR58 million ($151 million).
Meanwhile, valuations have become less stretched. The index is trading at a price-to-earnings ratio of 13.9, down from a peak of 15.8 in mid-April, according to markets website Simply Wall St.
Aggregate corporate earnings will expand 15 percent this year, U-Capital forecasts, supported by higher oil revenue, state spending and economic diversification.
Rising profitability shows the bourse rally was not “purely liquidity-driven”, said Abbas.
“Dividend yields remain attractive, valuations are still trading at a discount to regional peers and the medium-term earnings outlook remains strong,” he said. “These factors collectively provide a valuation and income-based cushion that limits the risk of a deep and sustained downside move.
“We see the recent weakness more as a buying opportunity rather than a structural risk-off signal, particularly for long-term investors.”
During the past year, utilities have been the top-performing sector on Muscat’s bourse, followed by materials and telecoms, according to Simply Wall St.
Among the standout performers is electricity generator Al Suwadi Power Co, whose shares have risen 170 percent over the past 12 months.
Utilities companies have also benefited from long-term supply agreements with government-backed off-takers, providing greater certainty over revenues and cash flows, Mathew said.
In telecoms, stronger profitability has been the main driver of the rally. Shares in state-controlled Ooredoo Oman have gained 61 percent in 12 months.
“We’re still very positive on the market for the rest of 2026,” he added.
“Blue chips should report higher earnings, especially in the materials and energy sectors where prices have risen and companies have been operating at near-capacity.”
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