Jordan Times
Wednesday, October 3, 2001
IPOs seen as financial tool for capital market
By Tareq Ayyoub
AMMAN — Initial public offerings (IPO) can be used as a major financial tool in attracting local and foreign investors to the Jordanian capital market, said an Amman Stock Exchange (ASE) official on Tuesday.ASE Chief Executive Officer Jalil Tarif, who was speaking to reporters during the one-day workshop on the use of IPOs in the privatisation process, said that expanding the number of investors will enlarge the “shareholder base” in the firms listed on the bourse and offer more liquidity to the capital market.
He stressed that incentives should be extended to investors to take part in IPOs as part of Jordan's privatisation process.
According to the participants in the workshop, which was inaugurated by Deputy Prime Minister and Minister of State for Economic Affairs Mohammad Halaiqa, incentives for buying into public shareholding companies are soft loans and tax exemptions.
Chairman of the Jordan Securities Commission (JSC) Bassam Saket called IPOs what he described as “popular capitalism” since they allow Jordanian citizens to invest in the capital market.
According to Saket, free floating shares on the Amman bourse amount to 42 per cent, mostly in the banking and industrial sectors, compared to 90 per cent in Britain.
“The popular capitalism is very essential to deepen the activities and performance of the capital market,” Saket said.
Many government officials and representatives of the JSC took part in the workshop, which was sponsored by the JSC, the Privatisation Commission and the British Government Department for International Development.
The participants in the workshop focused on the use of IPOs as a tool to develop emerging markets and to explore the Jordanian institutions that can benefit from such an instrument.
They discussed the privatisation experience of other countries and how those countries benefited from the IPO tool.
They also discussed the performance of the capital markets in the Middle East, where the Amman bourse was ranked third behind the stock markets of Bahrain and Egypt, according to studies conducted by international financial centres.