AMMAN — Higher confidence in the monetary and financial
systems drove the Jordan investor confidence index up in January 2021, to reach
147.6 points, up by 2.96 points from December of last year, the Jordan Strategy
Forum (JSF) shows in a new report.
اضافة اعلان
“People are now more used to the
COVID-19 crisis and its
conditions,” associate professor of accounting and director of international
relations at Princess Sumaya University of Technology Radhi Hamadeen said in a
phone interview with Jordan News. “They are more market-oriented and understand
how demand is affected by the pandemic.”
According to the report, the monthly confidence index is
measured by assessing three pillars and their sub-pillars. The three key
pillars are confidence in Jordan’s real economy, monetary system, and the
financial system.
Although the number of registered companies increased from
363 companies in December of last year to 415 in January, and the capital of
registered companies also rose, the overall confidence in the real economy
indicator fell.
“The number of registered companies, regardless of how
successful these companies will be, measures how open people are to
investment,” said Hamadeen. Among the factors he believes promoted this are
public policies regarding individuals’ payments, such as postponing tuition and
loan installments.
The confidence in real economy indicator was driven down by
drops in the manufacturing quantity index, which represents production levels
in the industrial sector, the number of registered construction permits and the
total tax from real estate activity, according to the report.
“The construction permit indicator points to the ability of
people to build,” said Hamadeen. “This is lower because I believe people’s
priorities are elsewhere, such as meeting financial commitments.”
Meanwhile, the second pillar, confidence in the monetary
system, witnessed an increase of 9.1 points to reach its highest value in 4
years. While the value of foreign currency reserves held at the Central Bank of
Jordan dropped, the decrease in the value of returned checks contributed to the
rise of the indicator.
According to the JSF methodology report, “a lower number [of
returned checks}
in a given month entails that foreign and local investors
are less likely to experience delays in collecting account receivables.”
Finally, confidence in the financial system also increased
in January 2021. To calculate this, the private sector credit growth, which
signals the banks’ risk appetite, and factors relevant to the Amman Stock
Exchange (
ASE) are considered.
This includes the average of equities listed on the exchange
and the relative change in foreign investment in the ASE, where a higher value
shows greater foreign investor confidence. All three of these indicators
witnessed hikes.
“The financial indicators are usually leading indicators and
improve the first,” Deputy CEO and Head of Capital Markets Bashar Amad told
Jordan News. “But I believe the real economy indicators are the most important
because they are more reflective of long-term expectations.”
Amad believes that the report findings were not surprising,
considering that signs of success in fighting the COVID-19 pandemic in some
countries, the rollout of vaccines, and the “huge, pent-up demand” for economic
recovery following the slowdown of 2020, which all drive up investor
confidence.
Amad expects that this renewed activity in the economy, as
shown by Jordan’s investor confidence index pillars, would gain momentum.
“With the improving COVID situation and the reopening of all
sectors, this will only get better going forward,” Amad explained.
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