The Amman Stock Market (ASE), like other economic sectors, saw a difficult year once again, brought down by underperforming shares, limited investor confidence and the spectre of violence and instability in the region.
With the release of the latest November figures, the ASE saw the value of stocks traded for the year 2000, which includes third market data added since June 16, experience a cumulative net loss of JD52 million. This represents a decline of 13.8 percent in value on the year.
The number of shares traded, again including third market data, stands at 223 million, a net loss of 39 million cumulatively over last year. This marks a decrease of 15 percent in trading.
The number of transactions as of November was also down from 1999, with a cumulative net loss of 20,675 transactions, or a drop of 13.7 percent.
The ASE saw a year to date decline of 9.4 percent in the unweighted stock price index as compared to last year. Meanwhile, the price index weighted by market capitalization fell 20.97 percent when compared to last year.
As of November, market capitalization stood at JD3.487 billion.
Jalil Tarif, CEO of the ASE, says the poor performance was related to the overall performance of the economy, political tensions and relations with regional countries.
He does look with satisfaction, however, to the major changes in the bond market with 132 new listings and 25 million new bonds swelling the market.
Omar Masri, managing director of Atlas Investment Group (AIG), sums up the market as “sluggish in terms of volume and liquidity.”
Meanwhile Naser Amad, general manager of United Financial Investments (UFI), laments, “I'm sick of saying the market is flat or on hold, it has remained the same now for nearly 10 years.”
He also comments there was too much optimism around the market this year.
Amad looks to competition from the Palestinian Stock Exchange (PSE) as contributing to this year's problems.
“Right up to the first quarter of 2000, a lot of money was directed to the PSE, and the [local] market was totally depressed,” he says.
Because a lot of investment was based on the enthusiasm and patriotism surrounding the PSE, and not necessarily on business logic, “people lost a lot of money,” says Amad. “This is probably what hit us the most.”
“With the market down for almost nine years, people were psychologically ready to see a booming market,” he comments.
Jordan's stock market has almost 70 percent of the economy listed on its exchange, which is an impressive figure by regional standards.
“Relative to peers in the region, this is very high,” says Masri adding this only shows how developed Jordan's equity culture has become. This tight link between the stock market and the economy means the ASE is an important indicator of economic performance.
It should be pointed out that the ASE is one of the oldest, most established markets in the region, but this has not meant success in recent years as international and even domestic money has been attracted to other markets.
This trend has led many to conclude the ASE suffers from an image problem and officials are keen to reverse this perception through ongoing work and reform programs.
Many of these changes were successfully showcased to the international community during the IOSCO (International Organisation of Securities Commissions) Emerging Markets Committee Meeting, which took place in late October. However it is unclear whether this will translate into renewed investor confidence in the coming year.¯ (Jordan Times)
By Owen Clegg
© 2000 Mena Report (www.menareport.com)
