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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT APRIL 2007 AMMAN STOCK EXCHANGE ASE's launched new index and introduced new sector classification. Jalil Tarif Chief Executive Officer The Amman Stock Exchange (ASE) has accomplished many projects in the year 2006 aiming at increasing market efficiency and upgrading the services it provides to market participants. The ASE has put into production a new version of the electronic trading system (NSC V2+) as part of the efforts to meet the increasing demand on the Jordan capital market and in order to raise the capacity of the electronic trading system to accommodate the increase in daily trading volume, as well as preserve the safety of securities trading and safeguard equal treatment of those dealing in securities. The ASE introduced new sector classification for the companies listed at the ASE. The new classification is in line with the classification adopted by Standard & Poor’s. As a result of this new classification system; the ASE has revised its main indicators and statistics, and recalculated these figures for the period 2000- 2006. In order to develop its indicators, the ASE launched new price index weighted by free float shares. This index is based for the most part on Dow Jones & STOXX methodology. The index was given a base of 1000 points as of 1999 closing. The ASE also introduced sub indices for the three main sectors and the 23 subsectors. The ASE has applied Directives of Right Issues, and started the listing and trading of this instrument for the first time in Jordan. By the end of the year 2006, the number of Right Issues traded was 22 issues. The ASE also, continues developing its online information dissemination. In this regard, the ASE signed an agreement with Bloomberg. Accordingly, Bloomberg will broadcast the ASE’s live trading information through its networks around the world. As for the ASE performance, the ASE Price Index Weighted by Market Capitalization closed at 5518 points by the end of 2006 compared with 8192 points by the end of 2005 a 33% decrease. The ASE Price Index Weighted by Free-Float Shares ended the year 2006 at 3014 points compared with the year 2005 closing at 4260 points a decrease of 29%. Trading value reached US$ 20 billion a decrease of 16% compared to the year 2005. The number of shares traded increased by 59% compared with the year 2005, reaching 4.1 billion shares, and the number of transactions increased by 44% compared with the year 2005, reaching 3.4 million transactions. The turnover ratio increased to 101% compared with 94% for the year 2005. The ASE market capitalization reached US$ 29.7 billion by the end of year 2006, a decrease of 21% over the end of 2005, representing 234% of the GDP. During 2006, the net investment of non-Jordanians increased by US$ 222. As a result, non-Jordanians’ ownership in the ASE market capitalization increased to 45.5% by the end of 2006. Finally, the ASE enhanced its cooperation with the local, Arab and international institutions. In this regard, the ASE signed two agreements with the Dubai Financial Market and the Abu Dhabi Securities Market regarding dual listings for securities in both countries. The agreements are aimed at facilitating the process of dual listing of shares of companies that are listed at the ASE and the two UAE markets. HISTORY AND DEVELOPMENT The 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 CEO oversees day-to-day responsibilities and reports to the board. The ASE membership is comprised of Jordan’s 65 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 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 a 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, the recoding of trades and dissemination of prices, • Monitoring and regulating trading, 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 26 March 2000, the ASE launched an automated order-driven Electronic Trading System. The new 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. On May 2006, the ASE activated the new version of the electronic trading system (NSC V2+), which comes as part of 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. 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: • apply for full membership in the World Federation of Exchanges (WFE). • upgrade technical infrastructure; namely; the electronic trading system, surveillance system, and increase the capacity of the ASE website. • improve on-line trading information dissemination by introducing new products such as launching the ASE Market Watch application for investors as a corporate and retail product through Internet. • introduce a new composite index and a blue chip index in cooperation with an International Index provider. The index will be a free float weighted index. • introduce internet trading. • launch a new website, with a new look and a new theme. • launch new financial instruments. PAGE 28
FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT APRIL 2007 AMMAN STOCK EXCHANGE OFFICIAL 6 MONTH STATISTICS US$ millions # Shares millions Total Volume Average Daily Volume Total Volume Average Daily Volume Stocks Jul-06 1,273.94 57.91 310.47 14.11 Aug-06 2,500.16 113.64 606.21 27.56 Sep-06 1,679.15 83.96 431.34 21.57 Oct-06 1,186.96 62.47 309.75 16.30 Nov-06 1,204.18 57.34 302.33 14.40 Dec-06 938.32 52.13 228.19 12.68 TOTAL 8,782.70 71.24 2,188.30 17.77 Bonds Jul-06 0.05 0.002 0.00002 0.000001 Aug-06 1.33 0.06 0.001 0.00005 Sep-06 0.0 0.0 0.0 0.0 Oct-06 0.0 0.0 0.0 0.0 Nov-06 0.0 0.0 0.0 0.0 Dec-06 0.007 0.0004 0.000005 0.0000003 TOTAL 1.38 0.01 0.001 0.000008 Other Jul-06 0.0 0.0 0.0 0.0 Aug-06 0.0 0.0 0.0 0.0 Sep-06 0.0 0.0 0.0 0.0 Oct-06 0.0 0.0 0.0 0.0 Nov-06 0.0 0.0 0.0 0.0 Dec-06 0.0 0.0 0.0 0.0 TOTAL 0.0 0.0 0.0 0.0 Market Capitalization (US$ millions) Index MONTHLY STOCK VOLUME VS INDEX (US$ millions) Stocks Index MONTHLY MARKET CAPITALIZATION (US$ millions) Jul-06 31,355.15 5,930.30 Aug-06 33,262.11 6,241.30 Sep-06 32,646.68 6,084.30 Oct-06 32,746.94 6,107.60 Nov-06 30,295.07 5,608.00 Dec-06 29,729.53 5,518.10 CONTACT INFORMATION 3,000 2,500 2,000 1,500 1,000 500 0 7,000 35,000 6,000 30,000 5,000 25,000 4,000 20,000 3,000 15,000 2,000 10,000 1,000 5,000 0 0 July Aug Sept Oct Nov Dec July Aug Sept Oct Nov Dec Contact Name Mr. Sami Hattab E-mail shattab@ase.com.jo Website www.exchange.jo PAGE 29
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