Jordan Times
Monday, December 3, 2001
Bourse records best performance in years, say analysts, investors
By Tareq Ayyoub
AMMAN — Describing the 2001 performance of the bourse as “the best” in years, many analysts and brokers applauded the Central Bank of Jordan's (CBJ) fiscal measures and government steps that boosted confidence in the Amman Stock Exchange among local and non-Jordanian investors.According to brokers and bourse officials, the ASE's trading volume doubled this year compared to last year, and the 70-share General Price Index (GPI) rose by 31 per cent amid expectations of remarkable profits by the listed firms, especially in the banking and industrial sectors. This, despite regional and international political instability which cast a shadow on international stock markets.
By the end of November, the bourse's trading volume soared to JD610 million compared to JD305 million in 2000.
Last month, the GPI closed at 176.2, the highest such figure in several years.
Transactions recorded this year rose by 115 per cent, up to 268,000, and market capitalisation totalled, until the end of November, JD4 billion compared to JD3.5 billion at the end of 2000.
The banking sector price index rose by 46 per cent compared to 12 per cent, 8 per cent and 30 per cent in the industrial, services and insurance sectors, brokers and bourse officials said.
The ASE's Chief Executive Officer Jaleel Tarif attributed the boom to the series of interest rate cuts by the CBJ “which encouraged many investors to transfer some of their holdings into stocks rather than keep them in commercial banks.”
In addition, the government's adherence to the privatisation process and reforms in the capital market, including the introduction of remote and electronic trading and the adoption of a policy of transparency by the bourse, have heightened trading on the floor, Tarif said.
“Above all, the performance of the listed firms and the rise in their half-year profits have enhanced the ASE's activities and boosted investor confidence,” Tarif told The Jordan Times.
Executive Manager of the Brokerage Department at Jordan National Bank Amer Muasher said he believed that recent economic measures launched by His Majesty King Abdullah and his visits to Jordan's leading trade partners, especially the US and European countries, have also hiked foreign investments.
“The Jordanian bourse's record this year is the best among Arab stock markets,” said Wajdi Makhamreh, head of trading at Atlas Investment Group.
“Despite the Palestinian Intifada, which cast its shadow on the Jordanian market, and the aftermath of the Sept. 11 attacks, the Jordanian bourse absorbed these events and overcame their impact in a very short time,” Makhamreh said.
He was referring to the 14-month-old uprising against Israeli aggression in the Palestinian territories and the terror attacks on the US, which led a plummeting of share prices worldwide.
Makhamreh said many Palestinians transferred millions of dollars from stocks in the Palestinian bourse to the Jordanian stock market “which is a safe haven for their money.”
“The year's good results have also attracted more foreign portfolios,” he told The Jordan Times.
But Muasher noted that some non-Jordanian investments recorded a decline this year after two transactions valued at a total of more than $100 million brought about the sale of the Kuwaiti government's shares in the Arab Bank Ltd. The two sales led to a slight decrease in foreign ownership in the Jordanian stock market.
Still, Arab Bank shares drew the most investments. The bourse's leading blue-chip, which controls over 42 per cent of the market capitalisation, saw its share price close at JD213 on Dec. 1 compared to less than JD160 at the end of 2000.
Other winners were pharmaceutical firms, which penetrated the US, European and Algerian markets this year, upping their profits.
Demand was also high for stocks of International Tobacco and Cigarettes, the Kingdom's leading tobacco manufacturer, following financial reports showing an increase in their annual profits this year.
The mining industry's shares also shot up in value, especially the Arab Potash Company and the Jordan Cement Factories Company whose profits had declined in the 2000. But the Jordan Phosphate Mines Company was still battling to reduce its losses this year, ASE brokers said.
Tarif said he was optimistic that next year will show even further improvement because of the anticipated listing of telecommunications and information technology firms on the bourse, especially the shares of Jordan Telecom.
“This step will enhance confidence in the market and bring more investors interested in the two sectors,” Tarif said.
“We can say for sure that the bourse performance this year was perfect, and things will be better when the listed firms unveil their 2001 profits next month,” Muasher said.