To restore investor confidence and put a halt to the liquidity crunch, brokers working at the Muscat Securities Market (MSM) have called for a ‘stock-split’. As one market analyst told the Times of Oman, “Your money can’t evaporate into thin air. The ‘stock-splits’ can pave the way for more realistic, transparent and further comfortable price movements.”
The basic concept of a ‘stock-split’ is to bring high share prices down to more affordable levels, essentially creating a psychological effect. The strategy would also, depending on the type of split, increase the number or outstanding shares on the market.
As a result of the recent fall in trading volume on the MSM, brokers are seeking to end the weeks of poor stock performance. Most of the trading has been blue chip stocks, making very few very rich. The Times of Oman wrote that market analysts “were blaming investors as they believe that the collapse was a result of lack of investor education, analysis and portfolio management.”
Thus, if Oman’s capital regulator approves the ‘stock-split’ scheme among companies in Oman, brokers are hoping that small investors will be persuaded to reinvest and ensure more liquidity, doubling the price movements.
The analyst added, “The present ‘two high-flying bulls and seven bear operators market’ will change.” –(Albawaba-MEBG)