But the bump didn't last long, nor was it very convincing, although it did naturally arrest what had been an accelerating decline in the market.
However, after opening higher, the market then fell away as shareholders gladly sold into the waiting cheque books of the pension funds, and prices fell over the course of day (although generally still up on Thursday's close). The index climbed 5% in the first 20 minutes to 9272 before falling back to close at 9002 for a 2% rise on the day, still well below the value at the start of 2008.
I guess its hard to write cheques with one arm twisted up behind your back!
Lets see how it continues this week.
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ReplyDeleteAn AME Info report on today's market performance:
ReplyDeleteGulf bourses panic after foreigners flee
A state of panic prevailed among traders today after all bourses declined sharply, except Muscat which rebounded by 2% after 9% loses last week. The rise in Muscat came after a recommendation by the minister of trade during a meeting with pension and investments funds in which he demanded interference by these funds.
full report at: http://www.ameinfo.com/168063.html
Letha
ReplyDeleteLets see what happens this week. There seems to be blood everywhere of late in the GCC markets for both shares and real estate. And with the oil price falling, dollar rising and global downturn looming, the short term view probably remains bearish until the market calls a bottom and starts buying again.
Active Government intervention in free markets is always very, very tricky. I can still remember when the Brits tried to avoid market forces in their Exchange rate mechanism /pound devaluation crisis and lost billions of taxpayers money trying to support a currency doomed to failure in the face of trillions of pounds of pressure.
In this specific case, when Omani pension funds spend money to buy shares that are devaluing due to market forces, there's a danger of 'throwing good money after bad' unless they can either fundamentally change the market sentiment or have extremely deep pockets...