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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2006 AMMAN STOCK EXCHANGE ASE's launched new index and introduced new sector classification. Jalil Tarif Chief Executive Officer The performance of the Amman Stock Exchange (ASE) during 2005 was exceptional and unprecedented. All stock market indicators for 2005 showed the best performance since the market was established in 1978. The ASE share price index peaked at its all time high on November 8th, 2005, when it reached 9,348 points. It closed the year at 8,192 points, which still implied a 93% rise compared with the end of 2004. During the first half of 2006, the price index went down by 26%, which is less than most of the regional markets. The trading volume in 2005 increased by 345% to reach US$ 23.8 billion, and 2.6 billion shares were traded–an increase of 93% compared with 2004. The value traded reached 185% of GDP compared with 46% in 2004. During the first half of 2006, trading volume reached US$ 11.3 billion, an increase of 18% compared with the same period 2005. The ASE market capitalization jumped to US$ 37.6 billion, an increase of 83% over 2004. Total market capitalization was 293% of the GDP at end-2005, which is very high by international standards. Among the Arab stock markets Jordan has the largest market capitalization in terms of percent of GDP. By the end of June 2006, the ASE market capitalization reached US$ 31.8 billion. Net of non-Jordanian investment during the first half of 2006 showed an increase by US$ 210 million, compared to an increase by US$ 120 million in the comparable period of 2005. In first half of 2006, the ASE has operated a new version of the electronic trading system (NSC V2+), which comes as part of the efforts to meet the increasing demand on 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, as well as the ASE's policy of preserving the safety of securities trading and safeguarding an equal treatment of those dealing in securities. The ASE introduced new sector classification for the listed companies at the ASE. The new classification is in line with the classification adopted by Standard & Poor’s with some minor modifications that render them suitable for the nature of Jordanian companies and contains three main sectors and 23 sub-sectors. As a result of this new classification; the ASE has revised its main indicators and statistics based on the new classification 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 based mainly 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 sub-sectors. The ASE also, continues developing its ways of dissemination on line information. In this regard, the ASE signed an agreement with Bloomberg. According to this agreement Bloomberg will broadcast the ASE live trading information through its networks around the world. Providing this service will fulfill the needs and requirements of Arab and foreign investors and other parties concerned with the Jordanian capital market. Finally, the ASE enhanced its cooperation with the local, Arab and international institutions. In this regard, the ASE signed two agreements with Dubai Financial Market and Abu Dhabi Securities Market regarding dual listings for securities in both countries. The agreements aim to facilitate the process of dual listing of shares of companies that are listed at the ASE and that wish to have their shares listed at the United Arab Emirates markets, and the same for companies that are listed in the two UAE markets and that wish to list their shares at the ASE. Also the ASE received delegations from various exchanges and international institutions. 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 59 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. 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 a full membership in the World Federation of Exchanges (WFE), • upgrade of the 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 nternational Index provider. The index will be free float weighted index, • introduce internet trading, • launch a new website, with a new look and a new theme; and • launch new financial instruments. PAGE 34
FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2006 AMMAN STOCK EXCHANGE OFFICIAL 6 MONTH STATISTICS US$ millions # Shares millions Total Volume Average Daily Volume Total Volume Average Daily Volume Stocks Jan-06 1,564.3 97.8 164.6 10.3 Feb-06 1,686.6 84.3 227.8 11.4 Mar-06 1,738.2 79.0 320.8 14.6 Apr-06 1,916.5 100.9 389.9 20.5 May-06 2,911.5 132.3 495.2 22.5 Jun-06 1,442.3 68.7 316.6 15.1 TOTAL 11,259.4 93.8 1,915.0 15.7 Bonds Jan-06 0.38 0.02 0.0001 0.000004 Feb-06 0.009 0.0005 0.000007 0.0000004 Mar-06 0.71 0.03 0.0001 0.000005 Apr-06 0.0 0.0 0.0 0.0 May-06 0.48 0.02 0.000005 0.0000002 Jun-06 0.15 0.007 0.00003 0.000001 TOTAL 1.7 0.01 0.0002 0.000002 Other Jan-06 0.0 0.0 0.0 0.0 Feb-06 0.0 0.0 0.0 0.0 Mar-06 0.0 0.0 0.0 0.0 Apr-06 0.0 0.0 0.0 0.0 May-06 0.0 0.0 0.0 0.0 Jun-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) Jan-06 39,431.6 8,530.5 Feb-06 37,063.2 7,555.5 Mar-06 34,928.9 7,069.7 Apr-06 34,832.8 7,039.5 May-06 34,572.5 6,918.7 Jun-06 31,814.8 6,055.0 CONTACT INFORMATION 3,000 2,500 2,000 1,500 1,000 500 0 9,000 40,000 8,000 35,000 7,000 30,000 6,000 25,000 5,000 20,000 4,000 3,000 15,000 2,000 10,000 1,000 5,000 0 0 Jan Feb Mar Apr May Jun Jan Feb Mar Apr May Jun Contact Name Mr. Sami Hattab E-mail shattab@ase.com.jo Website www.exchange.jo PAGE 35
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