This Mideast Market Has World's Biggest Quota of Oversold Stocks

  • Oman has the highest percentage of shares with RSI below 30
  • Country was cut to junk by S&P Global Rating last week

The Middle Eastern sultanate whose sovereign rating was recently cut to junk is home to the stock index with the highest proportion of shares in oversold territory in the world.

Almost half the members of Oman’s benchmark MSM 30 Index are trading with their 14-day relative strength indexes below 30, levels at which technical analysts deem the shares oversold. That’s the most among 122 equity indexes around the world tracked by Bloomberg.

A slump in oil prices in recent years has increased pressure on Oman’s finances, forcing it to join other Gulf countries in tapping international debt markets to plug budget shortfalls. S&P 500 Global Rating last week cut the country’s sovereign rating to junk, saying a drop in crude could hamper exports and jeopardize its finances.

The MSM 30 has tumbled 6.2 percent this year, the most among major stock exchanges in the Middle East. That compares with a 17 percent surge in emerging-market equities.

“The challenging macro outlook exacerbates the situation,” said Joice Mathew, the head of equity research at United Securities in Muscat. Poor first-quarter earnings at some companies, and some illiquid stocks are also among reasons so many shares are oversold.

Profitability won’t pick up at companies if oil prices don’t increase, according to Mathew. Among those in oversold territory are Ahli Bank SAOG and Raysut Cement Co. SAOG. The shares have tumbled 7.6 percent or more so far this year. The overall index is also trading with its 14-day RSI near 30.

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