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'Restoring investors' confidence needed to halt slide in prices at Amman Bourse'

AMMAN (JT) - Steps must be taken to restore investors' confidence in the Amman Stock Exchange (ASE) to stop share prices from continuing to drop, several Jordanian economists, analysts and brokers warned on Sunday.

The bourse's index has stabilised on Sunday slightly above 1932 points, the lowest level since 2004, reached on Thursday.

According to Jawad Kharouf, president of the Association of Certified Capital Market Professionals, the difficulties of troubled companies and those plagued with corruption must be addressed to allow the market to recuperate.

"The market must be cleaned from entities suffering bad conditions in order to draw domestic and foreign investments into the bourse", he said, according to Petra.

Kharouf mentioned mutual funds to protect small investors as another solution to rescue the stock exchange.

Nizar Taher, chief broker at Al Ahli company, agreed that corruption in several ASE-listed companies and court cases lodged against them have weakened the market's performance and shaken the confidence of investors.

Taher called for forming committees from regulators representing the Central Bank of Jordan, the Jordan Securities Commission and the Comptroller Department to exercise further oversight over the ASE-listed firms to help restore investors' confidence in the market.

Economists also agreed that public institutions with large liquidity, such as the Social Security Corporation and the funds of the pension and associations, should step in and salvage the bourse through pumping money into the market. They also stressed the role of the banking sector in this regard.

Small stumbling companies which do not have corruption problems should be encouraged to merge, said Jawad Anani.

Companies whose share prices went down by more than half of their value must "undergo the knife" because it is either that they need a complete change of their board of directors or capital restructuring, Anani added.

He encouraged investment bodies that possess financial portfolios to acquire sound shares describing such a step as being a long-term feasible investment.

"The downward trend in general has reflected on the good companies pushing down their share prices," Anani elaborated.

Mohammad Bilbisi, chairman of the National Securities Portfolio Company, said the bourse has not witnessed such a regression for more than eight years, noting that the present situation calls for immediate action to tap its causes.

He noted that recent liens imposed on some corporations, that led to suspending their share trading, have caused panic among investors and worsened the market's regression.

Few years ago, the market's daily trading volume reached JD40 million but this year, the daily trading volume stands at around JD5 million, he said.

Since the beginning of this year, shares lost JD3.5 billion of their value, Petra said adding that between 2008 and 2011, shares' total market value shed down by JD23 billion.

The stock market has always been recognised as the mirror of the country's economic conditions and its financial and monetary policies, financial expert Murad Adel said in further remarks.

© Jordan Times 2011