Omani Government To Prop Up Stock Exchange

by Lorys Charalambous, Tax-News.com, Cyprus

27 November 2008

Oman’s government is attempting to set up a OMR150m (USD389.6m) fund to try and alleviate the effects of the economic downturn and volatility on the market, which has seen share prices halve from earlier peaks this year.

The fund will be involved in both buying and selling shares on the Omani bourse in an effort to increase liquidity and smooth the volatility that has gripped Gulf Arab bourses over the past two months. The government has agreed to provide 60% of the fund amounting to OR90m with the private sector and pension funds contributing the remaining 40%.

Suleiman Al-Rashdi, Deputy Director-General of the bourse, said:

“I expect in a week’s time the government will announce the fund manager. I also expect the fund to start hitting the market the first week of December. The fund will be managed by a special administration operating on market fundamentals to provide protection from the sharp and unjustified volatility that the financial markets are being exposed to and also work towards balancing supply and demand factors in the market. The government hopes the creation of this fund will return confidence in the investment climate”

The Kuwaiti bourse has recently been subject to similar moves with the country's sovereign wealth funds buying up plummeting shares to try and shore up stocks and confidence.

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