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French Version

Against all odds, ASE rides high

The Amman Stock Exchange (ASE) is at its highest peak since it was first established over 20 years ago. The price index ended May on 195-points and closed at 196.5 points for the past week.

Brokers predict the price index will reach the 200-point level soon enough. Trading in stocks for the first week of June totaled JD 45 million.

This figure, brokers argued, highlights the potency and constancy of the stock market.

The ASE performance over the recent weeks revived hopes among shareholders and brokers alike over the positive indications the market represents for local economy. Many of them see in the ASE’s feat an indication of the resurgence in demand for local stocks in view of the rapid positive developments that emerged in the region recently. This is in addition to the positive results that shareholding companies have shown in the first half of this year.

Brokers, meanwhile, predict ASE’s high trading volumes and gradual increase of share prices will continue as the region is likely to sustain peace and stability on the long term.

"The market today is much stronger and tenable than before," said Amer Muasher, executive manager of the Brokerage Department at the Jordan National Bank. "The increasing transactions at the stock market indicate that ASE today enjoys shareholders’ liquidity rather than keeping the money frozen in the banks."

The rising tendency in the stock market was first noticed in late May when the government imposed a 5 percent tax on deposits’ returns at local banks. This move, said Muasher, forced many Jordanians to withdraw sizeable amounts to invest in stocks.

"Trading in banks’ stocks is more rewarding than interest rates," he added. "It is of mutual benefit for both the depositors and the banks, where the former buys the latter’s shares."

Besides the banking sector, 70 percent of ASE’s transactions at the moment focus on the low-priced shares, which represent many of the industrial and services companies. Shareholders are also focusing on small and medium-sized companies whose share prices are expected to flourish. Ziad Al Basha, director of the Financial Market Dept at the HSBC Bank in Amman, sees in the flourishing businesses at the ASE as positive signs for Jordanian industries to reach the Iraqi market.

"The dramatic surge at the ASE will continue and nothing can bring back the price index down if local and regional conditions remain stable," Al Basha told The Star. "At the moment, the main demand is for industrial and services shares but eventually other businesses would prosper."

Sectors like mining, insurance and banking attract shareholders’ attention. These companies announced earlier they predict better financial results for the first half of 2003, following their profits last year.

"It is clear that the stock market has averted the negative ramifications arising from the US-led war in Iraq," Al Basha explained. "Some sectors were adversely affected, but the overall situation remained under control."

Economists explain the rush among shareholders to buy industrial shares as due to the common impression among them that industries will soon start exporting to Iraq. Last week a gathering of Jordanian and foreign businesses in Amman considered the chances of reviving trade and business with post-war Iraq.

As the region gets less tense, ASE’s experts indicate that motives are still not mature enough to entice shareholders and investors back to the market.

Observers indicate that many shareholders are still unsure about the situation since Iraq lacks law and order. They suggest that local businesses will have to wait for sometime, or even months, until security and political stability are reinstated.

Besides, ambiguity rules over the implementation of the US-led "roadmap" peace plan in the Occupied Territories, which offsets recent indications by some shareholding companies to step up trade with their Palestinian counterparts.

Muasher believes trading at the ASE will continue to flourish, at least for the coming few weeks, until companies announce their semi-annual results for 2003. "These results will determine the ASE’s performance for the coming six months," he pointed out. "On the whole, indications seem positive but not as much as the way shareholders would like to have."

Economists agree ASE is getting "immune" to politics. "What we see in ASE today is a kind of awakening of businesses that slackened for sometime due to the political wavering in the region. ASE applauds the optimism and high expectations of peace in the region."

Muasher concluded that "the worst in politics had already occurred and the coming period will feature better prospects for businesses to grow."

Amman,23June2003
Ghassan Joha
The Star


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Exotica - Flowers - Shopping on line
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Engineering Consultants Lebanon
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Nsouli Jewelry Lebanon
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