Amman Stock Exchange
|Key people||Marwan Al-Bataineh Chairman|
Nader Azar CEO
|No. of listings||237 (2014)|
|Market cap||JOD 18.1 billion (2014)|
|Volume||JOD 2.2 billion (2014)|
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 chief executive officer oversees day-to-day responsibilities and reports to the board. The members of ASE are Jordan's 68 brokerage firms.
The ASE is committed to the principles of fairness, transparency, efficiency, and liquidity. The exchange seeks to provide a strong and secure environment for its listed securities while protecting and guaranteeing the rights of its investors. To provide this transparent and efficient market, the ASE has implemented internationally recognized directives regarding market divisions and listing criteria.
To comply with international standards and best practices, the ASE works closely with the Jordan Securities Commission JSC on surveillance matters and maintains strong relationships with other exchanges, associations, and international organizations. The exchange is an active member of the Arab Federation of Exchanges, Federation of Euro-Asian Stock Exchanges (FEAS) and a full member of the World Federation of Exchanges (WFE).
The ASE is charged with: providing enterprises with a means of raising capital by listing on the Exchange, 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 recording of trades and publication of prices, monitoring and regulating market 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
Jordanian Capital Market Profile
Establishment of the Amman Financial Market
Public shareholding companies were set up and their shares were traded in, long before the setting up of the Jordanian Securities Market. In the early thirties, the Jordanian public already subscribed to and traded in shares; the Arab Bank was the first public shareholding company to be established in Jordan in 1930, followed by Jordan Tobacco and Cigarettes in 1931, Jordan Electric Power in 1938, and Jordan Cement Factories in 1951. The first corporate bonds were issued in the early sixties.
As a result, an unorganized securities market has emerged in the form of non specialized offices. This prompted the government to contemplate the idea of setting up a market to regulate issuance of and dealing in securities, in a manner that would ensure safe, speedy and easy trading, and protect small savors, through a mechanism that would define a fair price based on supply and demand. Successive economic plans called for the establishment of such a market, and various parties started to prepare, with the government's support, for setting up an organized securities market. In 1975 and 1976, the Central Bank conducted intensive studies, in cooperation with the World Bank's International Finance Corporation (IFC), and it became clear therefrom that the size of the national economy and the share of the private sector in it through public shareholding companies and its broad investor base justified such a step. Such a market was perceived as a creator of and caterer for much needed opportunities for economic growth which would stimulate and spurt economic activity. These joint efforts bore their fruit, and Temporary Law No. 31 of the year 1976 was promulgate, and what was known as Amman Financial Market was consequently established. A Cabinet resolution of March 16, 1977 set up an AFM Administration Committee, which immediately went into action; and operation on AFM started on 1 January 1978.
The Law laid out the objectives of AFM as follows: to mobilize savings by encouraging investment in securities; thereby channeling savings to serve the interests of the national economy; to regulate issuance of and dealing in securities in a manner that would ensure the soundness, ease and speed of transactions to safeguard national financial interests and to protect small savers; and to provide the necessary data and statistics to achieve AFM objectives. As of its inception, AFM was entrusted with a dual task, namely the role of a Securities and Exchange Commission (SEC) and the role of a traditional Stock Exchange.
Since then and up to the founding of Amman Stock Exchange, a lot has been achieved. Trading on the Secondary Market rose from JD9.7 million in 1978 to JD3.0 billion in 2013; market capitalization of subscribed shares is currently around JD18.2 billion, as compared to around JD286 million by the end of 1978; and the number of listed companies went up from 66 in 1978 to 240 by the end of 2013.
Major developments of the Jordanian Capital Market
The Jordanian government adopted a comprehensive capital market reforming policy, which aimed at building on the previous 20 years' experience, boosting the private sector, expanding and diversifying the national economy, and improving regulation of the securities market to reach international standards. Among the most important features of the new orientation were institutional changes in the capital market, use of international electronic trading, settlement and clearance systems, elimination of obstacles to investment, and strengthening capital market supervision to reach optimum transparency and safe trading in securities, in line with globalization and openness to the external world.
The enactment of the Temporary Securities Law, No. 23 of the year 1997, was a landmark; indeed, it was a qualitative leap and a turning point for the Jordanian capital market. Its aim was to restructure and regulate the Jordanian capital market, and to complete its infrastructure in consistence with international standards, in order to secure transparency and safe trading in securities. The central feature of this restructuring effort was the separation of the supervisory and legislative role from the executive role of the capital market. The latter was left to the private sector, whereby Amman Stock Exchange/ Securities Market (ASE) and the Securities Depository Center (SDC) played the executive role, and the supervisory and legislative role was entrusted to Jordan Securities Commission (JSC). The Law provided for setting up three new institutions to replace AFM, namely:
1.Jordan Securities Commission (JSC)
2.Amman Stock Exchange (ASE) : It is a non-profit legal entity, with financial and administrative autonomy, and it is authorized to act as an organized market for trading in securities in the Kingdom. Its membership is made up of financial brokers, and it is managed by the private sector. It has started its operations on March 11, 1999.
3.Securities Depository Center (SDC)
Recently, a new Securities Law number 76 for the year 2002 has been issued, which authorized setting up other stock exchanges and allowed forming an independent investor protection fund, stricter ethical and professional codes, and a more stringent observance of the rule of law.
Establishment of the Amman Stock Exchange
The Amman Stock Exchange (ASE) was established on March 11.1999, as a result of the restructuring process of the Jordan Capital Market. The three institutions established include the Amman Stock Exchange, Jordan Securities Commission (JSC) and the Securities Depository Center (SDC) .
The ASE, a private sector, non-profit organization with legal and financial independence, is in charge of running the market. A similar private sector, non-profit organization, the SDC, oversees settlements and maintenance of ownership records. Regulation is in the hands of a government body, the JSC, which has clearly defined powers to develop and monitor the market. The ASE observes international standards of fair practice in the orderly transaction conduct of the market.
The Amman Stock Exchange has two separate tiers of stocks that are traded. The two-tier system was established, so that an investor can readily know the status of the company he wants to invest in and the requirements it has fulfilled. It also promotes the transparency of the ASE and the companies traded on the stock exchange.
There are certain strict requirements that must be met before a company can be listed in the first market of the ASE. Those requirements include the company must have made a pre-tax profit for at least two out of the three years before being listed. Also the company must fulfill certain requirements concerning the free-float and no. of shareholders in the company. In addition, investors must be able to easily sell their stocks through the stock exchange.
Companies can list their shares at the Second Market as soon as they obtain the right to start their operations from the Ministry of Industry and Trade.
Jordan Securities Commission
It aims at supervising the issuance of and dealing in securities, regulating and monitoring the activities and operations of those organs falling under its supervision. It also aims at regulating and supervising the disclosure of information related to securities, issuers, insider trading and major shareholders.
JSC has financial and administrative autonomy, and is directly attached to the Prime Minister, which would enhance it future role, and would enable it to effectively assume its supervisory role over the capital market. It has a Board of Commissioners, composed of five full-time members, which is entrusted with the following functions: drawing up draft laws and regulations on securities; approving the by-laws and regulations of the SDC and ASE; granting licenses issued under the Law; setting limits for commissions of financial services companies and members of the SDC; and adopting accounting and auditing standards for the organs falling under its supervision as well as standards for their qualified auditors.
Securities Depository Center
SDC was established on May 10, 1999 with the aim of ensuring safe custody of ownership of securities; registering and transferring ownership of securities traded on ASE; and settling the prices of securities among brokers. It is a non profit legal entity, with financial and administrative autonomy, and is managed by the private sector.
The ASE Indexes
Performance of the ASE, 2014
The Chief Executive Officer (CEO) of the Amman Stock Exchange (ASE), Mr. Nader Azar, said that the ASE achieved a positive performance during 2014 despite the surrounding political circumstances in Jordan within the Arab region and the continuous political tension in some region countries and its effects on the Jordanian economy. The ASE price index weighted by free float shares increased to reach (2165.5) point at the end of 2014 compared with (2065.8) point by the end of 2013; an increase by (4.82%). The market capitalization of listed shares at the ASE decreased slightly to JD (18.1) billion; a decrease of (0.8%), compared with last year 2013 closing, constituting (75.8%) of the GDP.
Mr. Azar added that despite the improvement in the ASE index, the other trading indicators witnessed a decrease in its performance during 2014. The trading value for the ASE during 2014 reached JD (2.3) billion compared with JD (3.0) billion for the year 2013. The number of traded shares reached (2.3) billion shares, traded through (956) thousand transactions, compared with (2.7) billion shares traded during 2013 through (1074) thousand transactions.
It is worth mentioning that December 2014 witnessed an improvement in the trading value for the ASE where the average daily trading value for December 2014 reached JD (12.3) million compared with JD (10.5) million for December 2013.
As for the performance of the public shareholding companies for the first three-quarters of the year 2014, the financial data for the 218 companies that provided the ASE with its quarterly reports revealed that profits before taxes of these companies have been risen to around JD (1.2) billion for the period (Jan-Sept) 2014 compared with JD (1.1) billion for the same period of 2013 and an increase of (7.9%)
As for the non-Jordanian investment at the ASE, which is distributed to more than one hundred nationality around the world, the statistics showed that the value of shares bought by non-Jordanian investors during the period (Jan-Nov) 2014 reached JD (318.2) million constituting (16%) of the total trading value, while the value of shares sold by them for the same period was JD (344) million, so as the net non-Jordanian investment has declined by JD (25.8) million, compared with a decrease by JD (135) million for the same period of 2013
Accordingly, Non-Jordanian ownership in companies listed at the ASE at the end of November 2014 becomes around (48.9%) of the overall market capitalization, where Arab investors constituting (36.2%), and non-Arab investors constituting (12.7%) of the overall market capitalization of the ASE.
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