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FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT APRIL 2011 AMMAN STOCK EXCHANGE ECONOMIC AND POLITICAL DEVELOPMENTS Enjoying a stable political and democratic environment, Jordan pioneers the countries of the region in terms of economic liberalization and private sector management. Indeed, it has an attractive investment climate, reflected in a package of investment incentives and exemptions and a free flow of capital. On the Economic level, the Jordanian Economy is expected to achieve a positive growth during 2010. The International Monetary Fund estimates that the growth in Jordan’s real GDP for the year 2010 will reach 3.4%. Inflation during 2010 has mounted to 5% due to higher international fuel and food prices. As for the monetary policy, the Central Bank of Jordan has cut the re-discount rate from 4.75% at the end of 2009 to become 4.25% at the end of November 2010. Interest rate on 6- month Treasury Bills fell from 2.8% at the end of 2009 to 2.3% at the end of November 2010, while the weighted average of interest rates for loans went down and reached 8.9% compared with 9.1% at the end of 2009. Domestic liquidity measured by Money Supply (M2) grew by 9.5% at the end of November 2010 when compared with its levels at the end of 2009. On the other hand, foreign currency reserves at the Central Bank of Jordan increased by 10.5% at the end of November 2010 compared with the end of 2009 reaching USD10.9 billion. Regarding the fiscal policy, public revenues showed an increase of 3.2% in the first 10 months of 2010 compared with the same period in 2009, while public spending showed a decrease of 2.6% for the same period. This decrease in government spending came as a result of the austerity measures applied by the government in order to curb the budget deficit and maintain the financial stability of the Kingdom. With regard to the External Sector, Jordanian exports and re-exports have risen by 8.1% during the first 10 months of 2010 compared with the same period of 2009, while imports have risen by 9.5% during the same period. Information obtained from the Exchange. JORDAN ECONOMIC CHARTS AND TABLES 2005 2006 2007 2008 2009 2010 Nominal GDP at Market Prices (US$ million) 12,588.7 15,645.4 17,765.4 22,719.3 25,127.8 27,193.2 (a) Inflation (%) 3.5 6.3 4.7 13.9 -0.7 5.0 Money Supply (M2) (US$ million) 17,438.6 19,900.8 22,012.4 25,816.9 28,227.5 30,907.6 (b) Population (million) 5.5 5.6 5.7 5.9 6.0 6.1 Per Capita GDP at Current Market Prices (US$) 2,300.1 2,793.8 3,104.2 3,883.6 4,202.0 4,450.6 (a) Exports, f.o.b. (US$ million) 4,301.4 5,204.4 5,731.5 7,945.0 6,384.1 5,189.8 (c) Imports, f.o.b. (US$ million) 9,317.3 10,260.4 12,183.1 15,116.2 12,658.8 9,980.8 (c) Direct Foreign Investment in Jordan (US$ million) 1,984.5 3,544.0 2,622.1 2,828.9 2,430.0 1,364.5 (c) (a) Estimate (b) November 2010 (c) Jan. - Sept. 2010 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 Nominal GDP (USD billions) Inflation (%) 30 25 20 15 10 5 0 2005 2006 2007 2008 2009 2010 14 12 10 8 6 4 2 0 -2 2005 2006 2007 2008 2009 2010 PAGE 30
FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT APRIL 2011 BAHRAIN BOURSE Yusif Humood Chairman Bahrain Bourse continued the development of its trading mechanisms in a way that will attract different segments of investors and clients, and increase their profitability. Despite the signs of relative recovery from the global financial crisis that had an impact on different countries worldwide in 2008 along with the increase in oil prices during the second half of 2009, the response of the market indices in the region to this recovery varied among markets. The reasons for such variation are partly psychological reasons, and the other part goes back to the distinctive characteristics of each market that differentiates one market from another. The performance of Bahrain All Share Index this year and the volume and value of shares traded reflects the psychological state that prevailed among investors at Bahrain Bourse resulting from the consequences of the crisis in spite of the good financial results reported by the majority of companies listed at the Exchange. This has led to a 19.17% drop in the index compared to its closing at the end of 2008. In line with the development strategy approved by the Board of Directors of Bahrain Bourse five years ago, one of the major decisions in the history of the capital markets’ sector was made with the issuance of Resolution No. (57) of 2009 in respect of corporatizing the Exchange and transforming it to a shareholding company, paving the way to major legal, administrative, and technical modifications that would change how the Exchange operates. Bahrain Bourse has completed the major part of its relocation project to Bahrain Financial Harbour in 2009. The new premises have been equipped with advanced technology and systems in a way that will enhance Bahrain Bourse’s competitiveness to provide more services. This will also enable Bahrain Bourse to provide the technical infrastructure that would encourage companies to benefit from these facilities. Bahrain Bourse continued the development of its trading mechanisms in a way that will attract different segments of investors and clients, and increase their profitability when trading in the shares of listed companies at the Exchange. In addition, the bourse widened its scope of cooperation with leading regional and international financial institutions to be able to provide its custodian services at the Exchange with the aim of enabling local and foreign institutional clients to invest at Bahrain Bourse and benefit from the opportunities available. Looking into Bahrain Bourse’s financial performance in 2009, the global crisis had an effect on the financial status of the Exchange where the operating surplus activate revenue reported a deficit of BD 127,180 thousand compared to the surplus in 2008. The accumulated surplus also decreased slightly from BD 3,950,112 to BD 3,822,932, recording a drop of 3.21%. On behalf of the members of Bahrain Bourse’s Board of Directors and staff, I would like to express my thanks and gratitude to His Majesty King Hamad bin Isa bin Salman Al Khalifa, King of the Kingdom of Bahrain and His Royal Highness Prince Khalifa bin Salman Al Khalifa, the Prime Minister, and His Royal Highness Prince Salman bin Hamad Al Khalifa, the Crown Prince and Deputy Supreme Commander for their guidance and continuous support of Bahrain Bourse. I would also like to extend my thanks to the Central Bank of Bahrain’s Chairman and members of the Board of Directors for their support of Bahrain Bourse. I would also like to thank the members of the Board of Directors of Bahrain Bourse for their opinions and contributions to the development of the bourse in the previous years. I would also like to thank Bahrain Bourse’s management and staff for their hard work during the year, hoping that such efforts will continue to further develop the Exchange. HISTORY AND DEVELOPMENT Bahrain Bourse (BHB) was established as a shareholding company according to Law No. 60 for the year 2010 to replace Bahrain Stock Exchange (BSE) that was established in 1987. The emergence of the capital markets sector in the Kingdom of Bahrain dates back to 1921 following the establishment of the first branch of a commercial bank (Standard Chartered Bank). In 1957, the first Bahraini Public Shareholding Company was established. Since then, more local public shareholding companies began to operate, reaching their peak in the beginning of the 1980’s. During this period, shares of public shareholding companies were being actively traded in a non-official market called “Al Jowhara Market”. As a result of a feasibility study prepared by the Government and the International Finance Corporation (IFC) highlighting the importance of establishing an official stock market in Bahrain, Amiri Decree No. 4 was issued to establish the Bahrain Stock Exchange (BSE) in 1987. The Exchange officially commenced operations in June 1989 with 29 Bahraini shareholding companies listed. In 1999, BHB implemented the automated trading system (ATS) to carry out all the exchange’s transactions electronically instead of the manual trading. In 2002, the regulatory authority and supervision of BHB was transferred from the Ministry of Commerce to the Central Bank of Bahrain (CBB) in which CBB regulates and supervises all the Exchange’s activities. FUTURE OUTLOOK In the year 2010, Bahrain Bourse will continue its efforts to attract more local, regional, and international mutual funds. The bourse will continue to attract more listed companies, both local and international and will also seek more cooperation with stock exchanges worldwide, with the aim of exchanging information and expertise. In addition, Bahrain Bourse will pursue strategic partnerships in many different areas that we hope to add value to all parties involved. PAGE 31
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