Speculators spoil trading activities at Amman Stock Exchange — Al Amin

AMMAN — Speculators' liquidity is prevailing at the Amman Stock Exchange (ASE), according to the annual report of a prominent Jordanian company.  

In a forword, the chairman of  Al Amin for Investment told the shareholders that, in the absence of institutional investments, speculators are the key bourse players influencing trading volumes and share prices.

Al Amin, established in November 1995, is listed on the ASE as a public shareholding company capitalised at JD10 million to subscribe and invest in stocks, conduct brokerage business in the ASE, develop and manage securities portfolios of third parties, and manage (Islamic) Muqaradah bonds.

The company owns 94.45 per cent of the Amman Securities and Investment Company which is capitalised at Jd1.5 million and operates as a brokerage firm for trading shares and stocks on the ASE.  

Noting that the trading volume last year amounted to around JD2.3 billion, down from JD3 billion in 2013, the chairman indicated that most banks are still reserved about investing in Amman Bourse or even extending facilities to investors on the assumption that the stock market is a "risky sector".

The chairman, Mousa Abdul Aziz Shehadah, also mentioned the regress of foreign investment, and weak liquidity as other factors behind the  decline in trading volumes.

"The unusual circumstances gripping the region, and the associated risks  continuing for nearly four years until now, blurs the outlook and makes it extremely difficult  to predict the bourse's trajectory during 2015," Shehadah wrote.

"Such a situation is spoiled by speculators whose liquidity, in the absence of institutional investments, weighs heavily on trading volumes and share prices," he said.  

The chairman expressed hope that the sharp drop in oil prices would have a positive effect on the Jordanian economy and on the ASE as such a  decline would lower production costs and operations in all sectors, especially the industrial companies that rely on energy in its activities.

Within this context, he mentioned transport and distribution firms as examples of entities that may profit, if not also liable under the new Income Tax Law that went into effect on January 1, 2015.                 

"In such cases, there will be higher demand for the shares of those companies resulting in higher prices," the chairman said.

Describing the activities at the bourse last year as quiet and the dealings as cautious, the annual report concluded that the company's operations generated a JD0.6 million profit, down  from a JD1.1 million recorded in 2013.

The shareholders on Wednesday approved a recommendation from the board of directors to distribute cash dividends at a rate of 6 per cent.

The JD600,000 in dividends were taken equally  from the profit generated in 2004 and from retained earnings from previous years.       

According to the annual report, Al Amin's capital investment stood at JD6.45 million at the end of last year. 

Total assets as of December 31, 2014, stood at JD15.2 million while total liabilities were JD0.7 million. Shareholders equity totalled JD14.3 million.

Jordan Islamic Bank and Bayt Al Tawfiq for Development Holding Company are the two major shareholders in Al Amin with a 38 per cent and an 8.7 per cent stake respectively.