FEDERATION OF EURO-ASIAN STOCK EXCHANGES
SEMI ANNUAL REPORT OCTOBER 2006
AMMAN STOCK EXCHANGE
ASE's launched new index and introduced
new sector classification.
Jalil Tarif
Chief Executive Officer
The performance of the Amman Stock
Exchange (ASE) during 2005 was exceptional
and unprecedented. All stock market indicators
for 2005 showed the best performance since
the market was established in 1978.
The ASE share price index peaked at its all time
high on November 8th, 2005, when it reached
9,348 points. It closed the year at 8,192 points,
which still implied a 93% rise compared with the
end of 2004. During the first half of 2006, the
price index went down by 26%, which is less
than most of the regional markets.
The trading volume in 2005 increased by 345%
to reach US$ 23.8 billion, and 2.6 billion shares
were traded–an increase of 93% compared with
2004. The value traded reached 185% of GDP
compared with 46% in 2004. During the first half
of 2006, trading volume reached US$ 11.3
billion, an increase of 18% compared with the
same period 2005.
The ASE market capitalization jumped to
US$ 37.6 billion, an increase of 83% over 2004.
Total market capitalization was 293% of the
GDP at end-2005, which is very high by
international standards. Among the Arab stock
markets Jordan has the largest market
capitalization in terms of percent of GDP.
By the end of June 2006, the ASE market
capitalization reached US$ 31.8 billion.
HISTORY AND DEVELOPMENT
The ASE was established in March 1999 as a
non-profit, private institution with administrative
and financial autonomy. It is authorized to
function as an exchange for the trading of
securities. The Exchange is governed by a
seven-member board of directors. A CEO
oversees day-to-day responsibilities and reports
to the board. The ASE membership is
comprised of Jordan’s 59 brokerage firms.
The history of securities trading in Jordan traces
its origins back to the 1930s. In 1976, the
Amman Financial Market was established to
create a regulated trading market. More
recently, as part of Jordan’s move to upgrade
its capital market, a Securities Law was enacted
in 1997 separating the supervisory and
legislative roles from those of exchange
operations. As a result, the Jordan Securities
Commission (JSC) was created in 1997, the
ASE and the Securities Depository Center
(SDC) were established in 1999. The JSC
supervises the issuance of and trading in
securities and monitors and regulates the
market. The SDC oversees clearing and
settlement and maintains ownership records.
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Net of non-Jordanian investment during the first
half of 2006 showed an increase by US$ 210
million, compared to an increase by US$ 120
million in the comparable period of 2005. & STOXX methodology. The index was given
a base of 1000 points as of 1999 closing.
The ASE also introduced sub indices for the
three main sectors and the 23 sub-sectors.
In first half of 2006, the ASE has operated a
new version of the electronic trading system
(NSC V2+), which comes as part of the efforts
to meet the increasing demand on the
Jordanian Capital Market and in order to raise
the capacity of the current electronic trading
system to accommodate the increase in the
daily trading volume, as well as the ASE's policy
of preserving the safety of securities trading and
safeguarding an equal treatment of those
dealing in securities. The ASE also, continues developing its ways of
dissemination on line information. In this regard,
the ASE signed an agreement with Bloomberg.
According to this agreement Bloomberg will
broadcast the ASE live trading information
through its networks around the world.
Providing this service will fulfill the needs and
requirements of Arab and foreign investors and
other parties concerned with the Jordanian
capital market.
The ASE introduced new sector classification
for the listed companies at the ASE. The new
classification is in line with the classification
adopted by Standard & Poor’s with some minor
modifications that render them suitable for the
nature of Jordanian companies and contains
three main sectors and 23 sub-sectors. As a
result of this new classification; the ASE has
revised its main indicators and statistics based
on the new classification and recalculated these
figures for the period 2000-2006.
In order to develop its indicators, the ASE
launched new price index weighted by free float
shares. This index based mainly on Dow Jones
To provide a transparent and efficient market,
the ASE implemented internationally recognized
directives regarding market divisions and listing
criteria. It also adopted procedures for
improving regulatory effectiveness.
The ASE is charged with:
• Providing companies with a means of raising
capital by listing on the ASE,
• Encouraging an active market in listed
securities based on the effective determination
of prices and fair and transparent trading,
• Providing modern and effective facilities and
equipment for trading, the recoding of trades
and dissemination of prices,
• Monitoring and regulating trading,
coordination with the JSC as necessary, to
ensure compliance with the law, a fair market
and investor protection,
• Setting out and enforcing a professional code
of ethics among its member directors and staff,
• Ensuring the provision of timely and accurate
information of issuers to the market and
disseminating market information to the public.
On 26 March 2000, the ASE launched an
automated order-driven Electronic Trading
System. The new system is in compliance with
international standards and takes into account
the G-30 recommendations. This system also
offers brokers immediate access to stock prices
and orders and enables members to trade
remotely.
Finally, the ASE enhanced its cooperation with
the local, Arab and international institutions.
In this regard, the ASE signed two agreements
with Dubai Financial Market and Abu Dhabi
Securities Market regarding dual listings for
securities in both countries. The agreements
aim to facilitate the process of dual listing of
shares of companies that are listed at the ASE
and that wish to have their shares listed at the
United Arab Emirates markets, and the same
for companies that are listed in the two UAE
markets and that wish to list their shares at the
ASE. Also the ASE received delegations from
various exchanges and international institutions.
FUTURE OUTLOOK
The Amman Stock Exchange will embark on a
number of key projects that will ensure
maintaining the lead that the ASE has amongst
Arab and regional stock exchanges. These
projects can be summarized as follows:
• apply for a full membership in the World
Federation of Exchanges (WFE),
• upgrade of the technical infrastructure;
namely; the electronic trading system,
surveillance system, and increase the capacity
of the ASE website,
• improve on-line trading information
dissemination by introducing new products
such as launching the ASE Market Watch
application for investors as a corporate and
retail product through Internet,
• introduce a new composite index and a blue
chip index in cooperation with nternational
Index provider. The index will be free float
weighted index,
• introduce internet trading,
• launch a new website, with a new look and a
new theme; and
• launch new financial instruments.