AMMAN -- It needs one or two mega institutions to pull the Amman Bourse out of the gloom, the head of a brokerage firm told The Jordan Times on Wednesday.
Eyad Al Sadi, brokerage manager at Elite Financial Services, stressed that the Social Security Corporation or perhaps a leading bank could restore the confidence desperately needed at the Amman Stock Exchange (ASE).
"There is no specific reason for the ASE to be battered by extremely low prices and trading volume. The country is not in an excellent economic situation, but not in a bad shape either. The overall business environment is good, but what is lacking is confidence," Sadi said.
He indicated that investors also seem to be waiting for one or more major companies to liven up the bourse with upbeat news or information that would sway them back to the trading floor.
Citing experience over several years, Sadi said that money "comes from under the mattress" when investors sense activity and a bubbly business climate.
The Elite brokerage manager blamed media, brokers, banks, companies and the government for not participating collectively in efforts to activate the economic cycle.
He attributed this to reluctance, at all levels in the private and public sectors, to shoulder responsibility and take important decisions, whether right or wrong, due to concerns about accountability, which could send people to the Anti-Corruption Commission.
Laith Al Zu'bi, broker at National Portfolio Securities, expects the slump at the ASE to continue in the coming few months unless something dramatic comes up.
According to a study he conducted a few days ago, the ASE price index would breach the 1,900 points level and slide towards 1,800. The price index stood at 1,852 points at the end of July 2012.
Zu'bi said the situation is not alarming as the prices are going down gradually and in low volumes. He said if the trading volume were high, that would be a cause for concern
He listed regional instability as the main factor clouding the performance of the bourse, noting that the Egyptian unrest unsettles investors and prompts them to leave not only that country but the entire Middle East.
Other factors mentioned by the National Portfolio Securities broker were a wait-and-see attitude among investors and the tax blows that rocked a few top firms such as the Jordan Phosphate Mines Company and Jordan Telecom.
"Investors want to assess midyear results of companies listed on the stock exchange, cautious not to put their money in a broken basket," he said.
Zu'bi agreed with Sadi and Masar Hamarneh from the ABC Investments that the prospect for a bourse rebound is dim unless regional events stabilise and people shake off insecurity concerns.
Hamarneh said recent government measures, like taxes, compounded the difficulties of some corporations, as higher taxes affect their profitability.
She added that people were in no mood to spend and wait to see how events unfold.
Another broker who refused to be named because of management instructions said many investors are reluctant to buy because of the general lack of interest and enthusiasm.
"Most of those who buy on margin basis are near their funding limits with the brokerages they deal with and, therefore, by selling even at a loss to avoid defaults, they are contributing to a further drop in prices," he said.
However, all brokers were in agreement that share prices of many companies are extremely attractive having fallen to much below their book value.
© Jordan Times 2013
