Jordan Times
Thursday, December 9, 1999
Bourse expects better 2000 trading
By Suleiman Al Khalidi
AMMAN (R) — The stock market suffered a drop in foreign investor demand this year, but accelerated reforms and easing of foreign ownership rules should boost prospects in 2000, the bourse's chief executive said on Wednesday.
Jalil Tarif, chief executive officer of the Amman Stock Exchange (ASE), said foreign buying accounted for nearly 24.4 per cent of overall turnover of JD370 million ($522 million) in the first 11 months of the year, compared with 29 per cent in the same period last year.
But he told Reuters he was hopeful that foreign investor interest in 2000 would be bolstered by prospects of peace in the Middle East and confidence in the Kingdom's recent accelerated liberalisation and privatisation drive.
Ongoing internal bourse reforms on enhanced transparency and disclosure rules were also expected to give a boost.
Tarif said that although net foreign investment this year had dropped, the bourse had survived a difficult year of uncertainty after King Hussein's death in February.
“We have still seen positive net foreign investment in 1999 despite a difficult year we passed through, reflecting continued interest in Jordanian shares,” Tarif said.
ASE, one of the most politically sensitive bourses in the Middle East, has seen a nearly 9.6 per cent drop in volume so far this year while prices have fallen by around five per cent, measured by the ASE official 60-share index.
Analysts say outside interest in 2000 would be given an impetus by government plans to dismantle the 50 per cent foreign ownership ceilings in the mining, construction and general retail sectors.
Foreign buying, which comprises mainly emerging market funds and some Arab institutional investors, reached a total of JD89.3 million in the first 11 months of 1999, against JD75.3 million worth of selling orders.
As such, there had been a net JD13.9 million of foreign investment so far this year, compared with JD44.5 million in the same period last year.
Last year's figures were boosted by the landmark $100 million sale of a 33 per cent government stake in the country's sole cement producer to the French firm Lafarge, executed as a pre-arranged block deal.
Western funds exceed Arab investor interest
Tarif said a diversified range of mostly Western emerging market funds had accounted for the bulk of non-local buying so far this year, and that demand was focused on blue-chips among the exchange's 152-plus listed firms.
They bought shares worth around JD61.3 million, or 68.6 per cent of total foreign buying, while non-Jordanian Arab investors buying orders accounted for the rest.
Arab investors, mostly institutions, accounted for 46.6 per cent of overall foreign investor selling in Jordanian shares so far this year, bourse statistics showed.
The non-Jordanian ownership percentage in the bourses' total market capitalisation of around JD3.9 billion rose to 44 per cent at end of November 1999, compared with about 42 per cent in the same period last year.