ASE index sees unprecedented spike, signaling economic recovery

(Photo: Shutterstock)
AMMAN — According to the Jordan News Agency, Petra, the general price index for shares listed on the Amman Stock Exchange (ASE) rose 5.38 percent, to 2,407 points, at the close of last week’s trading. During the previous week, the daily average trading volume was around JD11.8 million, up from JD7.1 million the week before, a 66 percent rise, while the total weekly trading volume was around JD59.2 million, up from JD35.7 million the week before. This increase, according to some analysts, is unprecedented.اضافة اعلان

Sami Shraim, an economist, told Jordan News that “this year has been a great one,” with some significant enterprises achieving record numbers in comparison to prior years. According to him, “ASE has recently been flooded with good prospects, which boosted demand and raised investors’ willingness to keep their stocks and acquire more.”

Shraim added that this year’s dividend payment “has surely led to a rise in stock prices, and this year’s profits were bigger than predicted, giving investors further reason to be optimistic”.

ASE has lost JD28 billion since 2005, as the market value has dropped from JD44 billion to around JD15 billion, he said, adding that “what happened this year is a significant shift”.

Shraim urged sovereign funds, investors, and the Social Security Corporation to increase their investments in the stock market, which he described as “full of great and promising chances” as many companies’ shares trade at less than half their true value.

He explained that huge corporations, such as mining companies, the Jordan Petroleum Refinery Company, and banks, have recently made “great profits”, and that these companies “have a big influence because they make up a large percentage of the market”.

According to Shraim, the surge in worldwide market prices had a substantial impact on the prices of minerals, resulting in significant profits for both the Jordan Phosphate Mines Company and the Arab Potash Company, which are now expanding into the production of semi-finished items.

He lamented the government’s poor role in developing the ASE, and urged it to “work on developing legislation to turn challenges into opportunities, as it can help create positive investment conditions”.

Economist Mazen Irsheid told Jordan News that there was an improvement in trade volumes and liquidity at the start of this year, compared to the previous year. This had favorable results for some of the big ASE businesses, such as mining companies, which saw their stock prices rise to levels not seen since 2006.

According to Irsheid, the Russian war on Ukraine resulted in an increase in the prices of basic materials, such as fertilizers, which benefited both the phosphate and the potash company, and “as demand for fertilizers increased, profits soared and these companies achieved unprecedented success”.

The Jordan Phosphate Company reportedly had a net profit of JD320 million, the largest since it started operating.

Irshaid said the “Jordan Petroleum Refinery Company stock broke the JD4 barrier for the first time last week, and continues to break new records this week”. The company’s figures for the previous year were encouraging, with a profit of almost JD52 million, the highest since the company was founded, he added.

Big companies with a large market capitalization had the greatest impact on the ASE index, he reiterated, and they distributed generous dividends this year. As a result, “investors will be more confident to buy more shares”, he said.

The ASE index exceeded expectations at technical level, Irsheid said; “it could not break the 2220 point barrier 10 years ago, but this year it did, reaching the 2,400 point level, which is a positive sign for the Jordanian market”.

Economist Zayn Zawaneh told Jordan News that the rise in the ASE index is “good news,” especially considering that many companies were severely harmed during the COVID-19 pandemic, which “affected loan payments and dividend distribution, causing clear harm to companies and shareholders” alike.

He added that enterprises recovered and their financial performance improved, resulting in record profits and dividends, and this makes the stock market more appealing to both Jordanian and foreign investors.

Non-Jordanian ownership of stocks surpasses 50 percent, he said, adding that “nothing prevents the creation of procedures that make these foreign investments long-term rather than short-term”.

Read more National news
Jordan News