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French Version

ASE bouyant despite global slowdown

Local and foreign interests in the Amman Stock Exchange (ASE) continue to grow. Despite political disturbances and the unrelenting occupation of the Palestinian territories, observers have pointed to the ASE's continually stable and upward trend.

The financial market's annual trade volume witnessed rapid expansion in 2001, even in the wake of the 11 September attacks in the United States. In 2001 the volume doubled from the previous year to JD 670 million. Market value increased by 28 percent to JD 4.5 billion. ASE officials agree the heated political developments in the region have overshadowed attitudes of local and foreign investors who still believe the ASE has potential for growth. Shareholders witnessed how the ASE's price index last year rose well over the 170-point level, a feat not seen in more than five years. A close review of ASE performance in 2001 shows how foreign investment impacted the overall trading of the stock market. Jordanian analysts and observers strongly believe the stock market reflects the soundness of the national economy. The political and economic stability in Jordan has attracted many investors to invest in the local markets. Last year's investments topped JD 880 million, nearly one-fifth of which were employed through the ASE. Non-Jordanian investments in the stock market have remained stable over the past 12 months. In December shares owned by foreign investors made up 38.5 percent of the ASE capitalization-an estimated JD 1.8 billion. Twelve months prior these investments constituted 42 percent of the market's capitalization. Some 33 percent of December's investments are Arab owned. ASE Chairman Abdel Rahman Touqan believes the quantity of non-Jordanian investments is related to a variety of factors. He says besides politics investors want to see a market that is transparent, buoyant and encouraging. "Last year the government succeeded in developing a business environment in Jordan that fortified foreign investments," Touqan said. "Foreign investors are greatly affected by non-political factors available in any other turbulent region like the Middle East." The Amman bourse is often regarded one of the most attractive stock markets in the region. Economists agree the business environment in Jordan is moving steadily. It is expected to continue this trend over the next two years. The launch of the US-Jordan Free Trade Agreement and the upcoming implementation of the Jordan-European Association Agreement will certainly heighten the quality of businesses in local markets, particularly the stock exchange.

"All indicators show Jordan has the capability to absorb more capital for the long-run," said Henry Azzam, chief economist at the Jordan Investment Trust. "This is only possible through the acceleration of the privatization process and the implementation of new policies to help the private sector develop its industries and fortify the capital market." Indeed any development in the private sector will certainly influence the overall performance of the market. Over the past two to three years specific sectors have shared in ASE's profit, the banking sector being one. This week the Jordan-Kuwait Bank announced landmark profits for 2001, an increase of 44 percent over the previous year. JKB Chairman Abdel Karim Kabariti said the bank succeeded in achieving JD 7.36 million in net profits, including a 4.5 percent increase in the bank's assets to JD 570 million. Arab Bank maintained its strength in the market, seeing its shares push the JD 220 mark. The industrial sector is also doing good business in the ASE. Pharmaceuticals and non-conventional industries achieved the majority of profits in the sector last year. Although it is too early to speculate, the implementation of the US-Jordan FTA agreement should certainly help these companies increase production. Improved relations with Iraq should also result in increases across the board. Trade exchange between Jordan and Iraq is expected to witness a gradual increase over the coming months in recognition of the nation as the Kingdom's closest partner. Observers point to the continuing political development on the Palestinian and Iraqi fronts and the toll it has had on ASE officials. They suggest officials should pursue more open-minded policies to increase the participation of local and foreign investors in market transactions. The entrance of Jordan Telecom Co and local IT manufacturers into the market later this year is expected to be another positive development. These companies are expected to revitalize the overall dealings in the market over the long term.

Ghassan Joha
The Star

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