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French Version

Traders at ASE patiently wait for war uncertainty to end

A cautious sigh prevails over shareholders and investors in the Amman Stock Exchange (ASE) following what is seen as positive indications at the United Nations.
Market observers, however, maintain war on Iraq is still possible in view of the current row between the US and its European allies, a fact that is hindering local share trading.

Observers believe the stock market is holding up in the face of the current political situation in the region. They agree Sundayís rise in the price index proves the market has a tenacity to sustain its self even under war talk.

The ASEís price index rose by two percentage points to almost 170 points after weeks of downward dealings. In view of dealing in industrial shares, observers agree the increase gives shareholders and investors a measure of confidence.

"Many businessmen and shareholders saw in the report of the UN chief weapons inspectors at the Security Council a clear indication that war on Iraq will not be soon," said Khalil Al Shami, one of the traders at the ASE.

"I think the market will remain cautious and dealers will keep watching for further political developments in the region. It wonít be easy for shareholders to sell or buy mass shares at this time. Only those who are in need of cash will do so on a limited range," Al Shami told The Star.

Jalil Tarrif, ASEís CEO, agrees the current political developments are affecting the financial situation in the market. He, however, assures investors and businessmen the marketís management is taking all the precautionary measures to sustain the potency of the market.

The ASEís market capitalization is estimated at $7 billion, about 85 percent of the Kingdomís GDP. Investors and shareholders, meanwhile, maintained their skepticism over a possible war on Iraq. Many of them expressed anxiety of the current no-war-no peace situation.

Over the past seven weeks, daily trading at the stock market was overwhelmed by the slowdown emerging among shareholders and investors. Observers predict many investors will not pay attention to the good financial standings of most of the shareholding companies, which were achieved last year.

Banks, industrial companies and some of the services companies continue to make profits, a continuation that started in 2002. Brokers at the stock market said the investors and shareholders are feeling happy about these profits but they are not ready to risk their assets at the market.

Wajdi Makhamrah, director of the Securities Exchange Dept. at the Atlas Investment Group, believes the global protests against the war on Iraq featured good motives for local investors and businessmen to resume their businesses in the Kingdom, including their ones at the stock market.

"This was obvious in the mounting demands on industrial shares lately, where shareholders and dealers made individual purchases of shares of industrial companies that have businesses in Iraq," Makhamrah pointed out. "Yet, the increase in the marketís price index doesnít mean war will not take place."

Many of the shareholders and investors stand at odds over the possibilities of averting an imminent war on Iraq. While shareholders agree Blixís report tapered the potentials for an imminent war in the region, some investors believe war is still an option.

"The people at the ASE still maintain high spirit," said Ziad Al Basha, a Jordanian banker and expert in financial markets. "It is obvious trading at the stock market is subject to the political developments in the region. If the Americans uphold their reluctance to avoid the war on Iraq, trading at the stock market will certainly endure a further slump."

Al Basha noted the coming few weeks are critical for the Amman Stock Exchange as deliberations will continue at the Security Council to reach an agreement over the Iraqi issue. The heat of these deliberations, he said, will be sensed in the stock market.

The rift between the US and its European allies over Iraq raises speculations among economists and businessmen that the US decision to go for war remains refutable.

"Although the Europeans disagree with the US on war, they still keep it as a possible option. They agree with the Americans that Iraq must endure tough inspections, something which may hinder future businesses in the Kingdom," said Muhannad Salameh, a bank shareholder. "Investors and shareholders are aware of all the political potentials in the region. Whether in peace or in wartime, the stock market will keep going on. But businesses will flourish if peace is maintained," Salameh added.

Amer Al Muasher, executive director of the Brokering Dept. at the Jordan National Bank, disputes the optimism among shareholders at the stock market. "Blixís report didnít present a significant conclusion about the war on Iraq," he said.

Al Muasher believes the ASE will soon face two alternatives. "The marketís share prices and its daily trading will be influenced by the advance of weapon inspections in Iraq. This may help the market to hold itself steadily and gives chances for share prices to ascend," he said. "Nevertheless, the share prices will fall gradually if war takes off."

Only big investors and shareholders will find in the war a good opportunity to buy the falling shares at the ASE. Brokers at the market predict share prices will keep falling during the wartime, depending on how long the war will be.

"The delaying of the war on Iraq for weeks helps investors and shareholders to adjust the share prices at the market," said broker Asaad Al Disi. "There will be modest profits as long as the deadline for war is not clear. The current falling prices encourage many investors and shareholders to increase their portions in the stock market."

Amman,24February2003
Ghassan Joha
The Star


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