Does Oil Prices Impact Sectoral Stock Market Prices? Evidence from Emerging Economies

This study investigates the effect of oil price (OPs) shocks on stock market prices (SMPs) of 48 listed companies in all sectors of the Muscat Stock Exchange (MSX) in the Sultanate of Oman. The analysis is based on monthly data collected from three main sectors (Finance, industry, and service) listed in MSX and intermediate international oil prices from 2009 to 2020. An alternative asset pricing model is used based on the Arbitrage Pricing Theory (APT). The model evaluated the correlation between independent factors, including oil price, interest rate, industrial production, and stock returns as the dependent variable. The analysis shows that oil price volatility has a notable positive effect on stock market prices across all sectors of listed companies on the (MSX) in the Sultanate of Oman. These findings may provide insight to policymakers to continue taking appropriate action during oil price shocks and for investors to take their decisions properly. The current study contributes to the existing literature by examining the impact of oil price shocks on stock prices in the Sultanate of Oman, GGC, and the Middle East, addressing a gap in the research.