Bourse activity puzzles dealers

By Mohammad Ghazal

AMMAN – As prices of about 70 companies listed on the Amman bourse are below the nominal value of JD1, brokers in the market said Wednesday the current situation provides a good opportunity for building new positions and investing in the bourse.

Attributing the current low trading volumes to lack of interest from institutions and foreign investors, dealers described the lackluster environment as similar to that in 2003 and 2004.

“The drop in the market is illogical. Although prices are lucrative for share purchases, it seems the confidence of investors is still low,” Hani Halawani, chief executive officer of IFA Financial Services, said Wednesday. “During this week, the Amman Stock Exchange index fell below 2,300 points, which is similar to the situation six years ago and that is not acceptable.”

Jawad Kharouf, president of the Association of Certified Capital Market Professionals, agreed.

“Prices of some shares are unbelievably low for investors to buy and build new positions, but that does not seem the case as the market has been declining since the beginning of the year,” Kharouf told The Jordan Times Wednesday.

According to experts in the bourse, the market value of shares in the bourse dropped since the beginning of the year till the end of June by about JD2 billion to JD20.7 billion, compared to about JD22.5 billion by the year end of 2009.

The dealers were not optimistic about a possible rebound in the market in spite of what they said was a “positive financial performance” by several companies listed on the bourse during the first half of this year.

“Results for many companies were better than expected, but that did not reflect positively on the marketة there are no major investment funds buying on the bourse,” Kharouf indicated.

Halawani echoed similar remarks.

“Small investors impair trading by not reading,” Halawani said giving as an example the case of a company whose shares were in high demand last week, a day after announcing a JD3 million loss in the first half of this year.

“This is usually the case, people do not base their decision on facts,” he added.

A broker, who preferred anonymity, expected a drop in August, especially with the start of Ramadan.

“Usually small investors sell their shares before Ramadan because trading is low during the holy month. They prefer to sell and buy after Eid Al Fitr and that happens every year,” said the broker.

jordantimes