Jordan Times
Sunday, September 10, 2006
weekly analysis: Amman Stock
Exchange
AMMAN — The Amman Stock Exchange (ASE) index rose for the fifth week in a row achieving
an 8.9 per cent increase since the beginning of August, to recuperate some of the losses
it suffered from the beginning of the year. The index finished the week at 6399.4 points,
up by 2.53 per cent. Market capitalisation stood at JD24,125,303,502.
On the economic front, Minister of Finance Ziad Fariz announced a medium to long-term
government plan to reduce the budget deficit, cut expenditure, and down size the public
sector. The plan envisages a 3.5 per cent budget deficit (including foreign aid) by the
end of 2009, compared to the current average of 6.5 per cent. On the other hand, the value
of paid-up capital for newly registered companies in the past eight months has risen to JD863
million, compared to JD 355.6 million in the same period last year. Public shareholding companies
achieved the highest growth in the value of the capital registered it grew by 527 per cent to reach
JD440.7 million. Meanwhile, agricultural and contracting companies achieved the highest growth in
the number of companies registered to grow by 95 per cent and 36 per cent, respectively. On the
trading floor, average daily trading volume decreased by 8.9 per cent, reaching JD71.359 million.
Overall advancers outnumbered decliners as 84 companies out of 166 advanced, while 70 companies declined.
In the banking sector, the Arab Bank (ARBK) led the sector in terms of the trading volume with
JD36.5 million worth of shares where traded, approximately 10.24 per cent of the total volume
traded this week. The share’s rise of 3.99 per cent helped the general index to achieve an upward
trend. The share ended the week at JD25.79 with a P/E ratio of 19.5x based on our estimates for
2006 net income.
ARBK has announced this week its purchase of 50 per cent of the Turkish MNG Bank in a step taken
to expand its operations in growing markets and regions. This step was made simultaneously with the
purchase of the Hariri-owned BankMed of 41 per cent of MNG Bank.
On a different note, the Export & Finance Bank has launched its new corporate name, brand identity
and logo: Capital Bank. In the insurance sector, the ASE has announced the commencement of trading
for the shares of Euro Arab Insurance Group (AMMI) on Sunday at a floating price. Noteworthy, is that
the company’s losses for the first half of 2006 amounted to JD1.14 million, compared to a profit of
JD1.53 million in the first half of 2005. The sector’s index rose by 0.208 per cent this week to stand
at 4953 points amid a low trading volume.
In the services sector, United Arab Investors’ (UAIC) has obtained the approval of the Ministry of
Industry and Trade to raise its capital from JD120 million to JD150 million through the entry of
strategic partners. UAIC’s share went up slightly by 2.93 per cent to close at JD3.87 with a P/E
ratio of 39.1x based on our estimates for 2006 net income. On a different note, the ASE has announced
that two new real estate companies will begin trading next week in the second market. The first company
is Methaq Real Estate Investment Company which starts trading today under the ticker MEET. The second is
High Performance Real Estate Investment Company which will start trading tomorrow under the ticker HIPR.
With these two new companies the number of real estate investment companies listed on the ASE rises to 23
and the total paid-up capital of the sector rises to JD544.7 million. In the industrial sector, the sector
index rose slightly by 0.44 per cent amidst low trading volume.