Is tomorrow the time to buy Bank Muscat????

As you may know, on Friday the floor fell out from beneath pretty much every stock market in the world, and as the Muscat Market is closed on Friday, when it re-opens tomorrow its pretty clear where it will be going. Down. Down. Down.

The last few days the Muscat market has been as volatile as its allowed to be: down 10%, then up 10% (the price movement is capped at +/- 10% per day). (aside: The Government also seem to have set a floor on Omantel shares.)

So, if you've some spare cash, and want to gamble on getting a good deal and on there being no melt-down of the international financial system, talk to your broker about buying some shares at some time around 11:30am tomorrow. There's a good chance Bank Muscat will be available at bargain prices, although it can't drop below around 0.94 rials due to the cap. Its possible that it'll be even cheaper on Monday, especially if the international markets stay locked in lemming-mode, but I still think its a good long-term buy at anything around 900 biasa, if the numbers as reported are true. Same goes for Galfar around 1.1 rials, a company whose order books are full to bursting with well funded engineering projects.

As long as the oil price stays above ~$60 and people are actually able to buy the crude, the Omani economy will keep trucking just fine, thanks to major Government funded domestic infrastructure and Oil & Gas spending projects.

A huge problem is there have been no real official statements to the market on the status of Oman's banking system. What is needed now is not more adhoc waffle from the Government or the Chamber of Commerce on how cheap shares are and how solid the economy is, but some detailed audited announcements by the Finance Professionals in charge of the banks on what the actual exposure the Omani banks and banking system have to several important areas:
- The Oman housing and land market (which is also dropping like a rock)
- The Oman stock market
- Overseas investments in other stock markets
- American and European CDOs [Collateralised Debt Obligations]
- Unsecured personal loans
- Current provisions for non-performing loans vs latest non-performing rates and expected future rates of non-performance

While the banks seem to be well capitalised, and so shouldn't be going broke in normal circumstances (and are therefore reasonably safe as far as being a depositor goes), the above could have a huge impact on what they are actually worth as a shareholder.

The silence from the CEOs of the big banks is right now being taken as a sign that they are concealing bad news. The market will not recover until the air is cleared on these issues.

And if nothing is done, and the meltdown continues, there will be a big danger of a run. And if that happens, its a potential disaster scenario. No matter how big a punt you're willing and able to take on the markets (and right now a gamble is what it would be), take my advice and make sure you have a reasonable stash of cash, rice and perhaps a bit of gold folks...

The next few days may be crucial, for all of us...