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ASE jitters in light of regional situation: Stock market weary despite attempts to revive it

The war on Iraq has still not been waged, but public opinion especially among businessmen and investors is very jittery. This gloomy picture has been seen at the Amman Stock Exchange (ASE) for sometime now. Share prices at the stock market are still below average and shareholders remain indecisive about whether to take part in daily trading.

Statistics show that ASE's trading volumes are descending and expected to continue to do so as long as the US war rhetoric continues.

Jordanian economists, however, predict a good situation at the stock market following the sale this week of 250 million shares of Jordan Telecom on the ASE floor.

This step follows the recent initial public offering (IPO) of JTC shares, in which more than 70 percent of the proposed 37.5 million shares were sold to the public at JD 2.35 per share. Earlier trading on the JTC share at the ASE was stable, climbing two percent over the IPO price. The sell-off of JTC's shares in the stock market is expected to increase the company's capital by more than 10 percent in the long-term.

Jalil Tarrif, the ASE chief, said the JTC shares are still subject to supply and demand. " What really matters here is the JTC's overall performance. If the company continues its good results, this will affect its shares positively, and vice versa," he explained.

But Dr Tayseer Abdel Jaber, vice-president of the Jordan Securities Commission, believes the earlier trade of JTC shares will be limited for several reasons.

" It is true the JTC shares will increase the ASE market value and the capital market in Jordan," he said. " However, those who bought the JTC shares earlier are not interested in taking part in the current transactions, unless the share price begins to ascend." The JTC enrollment as one of the ASE's 158 shareholding companies is seen only as a good opportunity for the stock market to adjust its fluctuating performance. The threats of war on Iraq have not prevented the ASE from doing good business this year. The ASE market value of JD 4.4 billion is expected to exceed JD 5 billion, thanks to the JTC shares.

Unofficial statistics estimate the ASE's gross trading volume over the last 10 months at JD 800 million, but that has failed thus far to convince investors and businessmen to take part in current trading sessions.

Economists believe the spreading fear among investors and shareholders is likely to prevail for the coming few weeks, unless the US administration makes clear its intentions on Iraq.

Tarrif rejected the shareholders' excuses about their fears of a future military strike against Iraq. " It should have been clear for all investors and shareholders that war didn't happen yet. Their fears are nonsense," stressed Tarrif, who added, "The ASE daily transactions should cope with the good results that shareholding companies have achieved so far this year." In October, the overall trading volume on the ASE was worth JD 31.3 million, about 30 percent less than that in September. Brokers at the market believe these figures are justifiable, as long as Jordanian and foreign investors remain interested in the political developments about Iraq and Palestine.

Jordanian economists believe the ASE symbolizes the current situation of the Jordanian economy. Jordan's international exports in the first 10 months of 2002 increased by 40 percent over 2001. Statistics estimate Jordanian exports worldwide for 2002 at $1.5 billion.

Iraq is importing one-fifth of these exports, while the US comes next with some JD 180 million. Both the US and Iraq are Jordan's greatest trade partners and account for about one-third of international exports. Iraq is Jordan's sole oil supplier with over 5.5 million tons of oil products, and the US supports Jordan's economy with more than $450 million in aid.

Mohammed Saqr, professor of economics at the University of Jordan, sees in the current conditions of the ASE a mirror of public fears, and not only those of the business sector. "We need a government that shows its capacity in dealing with the economic and political situation in the Kingdom when the war breaks out," Saqr told The Star.

Although he maintains that war on Iraq is still uncertain, the economist reiterated his calls to the government and the private sector to treat the current economic situation in Jordan in better way. "All are involved to know how to treat the economy under warlike circumstance," Saqr added.

The downward trend continues in the public sector too. The treasury failed to exceed its revenues for the first 10 months of 2002 of JD 1.5 billion, which was the same as that of 2001.

Iraq's yielding to international pressure in September in allowing the return of UN weapon inspectors was seen as an encouraging gesture for Jordanian shareholders. Still, this gesture is losing its economic weight in Jordan in view of the US's continuing policy of sparring with Iraq.

Amman,11 12 2002
Ghassan Joha
The Star
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