JUNE 2013 - FEAS

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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013 AMMAN STOCK EXCHANGE The ASE has continued in 2012 with its efforts, aiming at developing the market, and increasing its efficiency. Nader Azar Acting Chief Executive Officer The Amman Stock Exchange (ASE) managed to pass the year 2012 with a stable performance in spite of the unstable political situation in the surrounding countries, especially in neighboring Syria. On the economic level, 2012 wasn’t an easy year for Jordan as well, due to multiple factors that weighed on the budget deficit including the huge influx of Syrians seeking refuge in Jordan, the Egyptian gas supplies that stopped for a prolonged period, and the foreign aids that stalled. However, these economic issues eased before the end of the year, and the performance of the ASE was stable as it can be noticed by the slight decline in the ASE general price index which went down by 1.88%. In addition, the ASE retained the confidence of investors especially foreign investors whose ownership in the ASE stood at 51.7% at the end of 2012. On the other hand, the ASE continued with its efforts in updating the technical infrastructure. And on the legislative level, the ASE applied new Listing Securities Directives. These directives are considered a major achievement in the year 2012, and according to these directives, listed companies were distributed on three different markets instead of two, with the third market having different trading hours and the first market having higher fluctuation limits. The criteria that determine to which market each company pertains include shareholders equity, free float of the company, profitability, company’s capital, number of shareholders, and others. As for the performance of the ASE during 2012, the Free Float Weighted Index went down by 1.88% to close at 1958 points compared with its 2011 closing of 1995 points. The trading value reached US$ 2.8 billion and the number of traded shares reached 2.4 billion while the number of transactions reached 1 million. In addition, the net of non-Jordanian investments at the ASE showed an increase of US$ 53.1 million during the year 2012. HISTORY AND DEVELOPMENT The Amman Stock Exchange (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 Chief Executive Officer oversees day-to-day responsibilities and reports to the board. The ASE membership is comprised of Jordan’s 63 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 the year 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. 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 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, recording the trades and dissemination of prices, • Monitoring and regulating trading, in 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 March 26th 2000, the ASE launched an automated order-driven Electronic Trading System. The 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. In May 2006, the ASE has activated a new version of the electronic trading system (NSC V2+), which comes as part of the efforts to meet the increasing needs of 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. On March 22nd 2009, the ASE launched the new version of the electronic trading system NSC V900. This project is considered a quantum leap for the concerned institutions as the electronic trading system has become linked with the SDC systems and the JSC new monitoring systems. The new version will help develop the trading process at the ASE and enhance the capacity of the electronic trading system. On July 14th 2010, the ASE launched the Internet Trading service. This service is seen as a major opportunity for interested investors to trade in securities regardless of their geographic location. In addition, the service will help increase the number of investors at the ASE and enhance their aptitude to engage in securities trading. PAGE 20
FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2013 AMMAN STOCK EXCHANGE On November 1st The (ASE) launched a new market segmentation where markets were reclassified by virtue of the new Listing Directives that became effective as of 1/10 /2012. The ASE began the implementation of the new trading hours and the new price thresholds according to the new segmentation. The ASE ‘s Board of Directors determined the price thresholds for the shares of companies listed on the First Market to become (7.5%) instead of (5%). The price thresholds for the shares listed on the Second and the Third markets remained (5%). The new directives obliged all the listed companies for the first time to provide the ASE with their quarterly reports reviewed by the companies’ auditors as of the first quarter of the year 2013. Starting January 2013 the ASE launched three indicies pertaining to each individual market. As for the Jordan National Financial Center building, procedures are being taken in order to transfer the ownership of the building to the Treasury of the Hashemite Kingdom of Jordan, and the ASE will close the accounts of the project and finalize the ownership transfer during 2013. 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: • Continuing upgrading the technical infrastructure. • Launching new financial instruments. CAPITAL MARKET DEVELOPMENT AND ECONOMIC OUTLOOK The Jordanian Economy has achieved a real growth of 2.5% during 2012, where the GDP reached USD 30,981 million, while the inflation rate reached 4.8% due to higher international fuel and food prices. As for the monetary policy, the Central Bank of Jordan has increased the re-discount rate from 4.5% at the end of 2011 to 5.0% at the end of 2012. Interest rate on 6-month Treasury Bills rose from 3.2% at the end of 2011 to 3.8% at the end of 2012, while the weighted average of interest rates for loans rose to 9% at the end of 2012 compared with 8.7% at the end of 2011. Domestic liquidity measured by Money Supply (M2) grew by 3.4% at the end of 2012 compared with its levels at the end of 2011. In addition, foreign currency reserves at the Central Bank of Jordan stood at USD 6,616.1 million at the end of 2012. Regarding the fiscal policy, public revenues showed a decrease of 6.6% at the end of 2012 compared with the year 2011, while public spending showed an increase of 1.0%. As for the External Trade Sector, Jordanian exports and re-exports have decreased by 1.2% at the end of September 2012 compared with the same period of 2011 while imports have risen by 10.5% during the same period. Key Information Contacts Jordan Securities Commission www.jsc.gov.jo Securities Depository Center www.sdc.com.jo Jordan Investment Board www.jordaninvestment.com Arab Monetary Fund www.amf.org.ae Ministry of Finance www.mof.gov.jo Central Bank of Jordan (CBJ) www.cbj.gov.jo National Information Center www.nic.gov.jo Department of Statistics www.dos.gov.jo CONTACT INFORMATION Contact Name Mr. Nader Azar E-mail nazar@exchange.jo Website www.exchange.jo PAGE 21
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