AMMAN -- The Amman Stock Exchange (ASE) index rose by 0.4 per cent closing at 6004 points on Monday as share prices of 80 companies posted gains whereas the stocks of only 35 companies declined.
The index gained almost five per cent since July 16, when it bottomed at 5704 points low, as the trading volume continued to increase reaching JD91.2 million.
Financial analysts attribute the rise to investors' increasing awareness of market fundamentals, the significant demand on shares related to real estate development and the "attractive" price levels of some services and industrial stocks.
National Portfolio Securities Company (NPSC) Investment Manager Khaled Najjar told The Jordan Times that investors were more eager to invest in companies that owned real estate.
He explained that investors were more aware of the significant growth in construction and real estate development which consequently led them to purchase shares in these companies.
"Investors are now more selective in purchasing shares and stocks especially after most of them suffered large losses over the past eight months," said Najjar.
International Brokerage and Financial Markets CEO Makram Alami agreed with Najjar noting that investors are "becoming smarter" and not trend followers.
"Share prices of some companies reached bargain levels over past months luring investors back to the market," explained Alami.
NPSC's investment manager stressed that investors should now realise that 2005 was an exceptional year in terms of soaring prices of shares. He explained that the drop in prices this year came as a result of many "fundamental and technical factors including stock dividends or and stock splits."
Financial analyst Haytham Sawalha agreed with Alami and Najjar noting that investors are now basing their purchasing decisions on market fundamentals rather than rumours and street talks.
"ASE investors are now digging for more information and I believe they should continue focusing on mid-term and long-term investments rather than sticking to the "hit and run" approach," Sawalha remarked. Sawalha underlined his expectations of a continuous growth in the market pointing to the importance of marketing the ASE internationally to bring more funds to the market.
Najjar and Alami both expected a positive trend of the market over the next few months doubting any major surges similar to the ones recorded in 2005 or any significant drops such as the ones registered earlier this year.
By Mahmoud Al Yahya
© Jordan Times 2006
