Business

AMMAN — The finance lease volume in the Kingdom is estimated at JD1.2 billion, 80 per cent of which is directed to the real estate sector, Amjad Saeh, president of the Jordan Association of Finance Lease Companies, said Saturday.

At a workshop on finance lease and its importance to the national economy, Saeh noted that there are 16 finance lease companies in Jordan, seven of which are owned by commercial banks, four by Islamic banks and five are owned by non-bank institutions.

Participants discussed all articles in the finance lease law to raise awareness on how to complete transactions at the Land and Survey Department.

Muein Sayegh, director of the department, highlighted the importance of organising such workshops, in cooperation with the department’s partners, for their role in acquainting employees with the law and explaining how the mechanism transactions are carried out.

LONDON — The euro tumbled through the $1.09 level to strike a fresh 11.5-year low Friday as the ECB nears the launch of its massive stimulus package and strong US jobs data raises the possibility of a US rate hike soon.

The single currency sank to $1.0845 as European markets closed, the lowest since September 2003, after strong non-farm payrolls data increased expectations that the US Federal Reserve (Fed) may move to begin hiking interest rates in the coming months.

But with the European Central bank (ECB) to begin its 1.1 trillion-euro quantitative easing stimulus on Monday, most eurozone stock markets pushed higher.

Frankfurt's benchmark DAX 30 index of top companies closed up 0.41 per cent to 11,550.97 points after reaching an intra-day record high of 11,600, while in Paris the CAC 40 rose 0.02 per cent to 4,964.35 points.

On the downside, London's FTSE 100 index ended the day down 0.71 per cent to 6,911.80 points, having posted a record closing high on Thursday after the ECB announced its bond purchases will start this week.

The euro tanked against the dollar after the US Labour Department said Friday that the US economy pumped out a stronger-than-expected 295,000 net new jobs in February.

Analyst Craig Erlam said the good jobs numbers "will only feed into expectations for a rate hike from the Federal Reserve in June".

"The rally in the dollar immediately after the release clearly supports this view...," he added.

Higher interest rates will make the dollar attractive, while the ECB's stimulus programme will flood the economy with euros and weaken its value.

ECB throws
'kitchen sink' 

Some analysts predict the eurozone unit could reach parity against the dollar amid a growing policy divergence between the ECB and the Fed.

The Frankfurt-based central bank is battling deflation risks across the 19-nation eurozone, while its US counterpart exited its own QE programme in October, and is mulling an interest rate hike later this year amid optimism over the American economy.

"Diverging policy stances between the Fed and ECB look set to persist for some time, pushing the euro towards parity over the medium-term as the search for yield drives euro area investors to increase exposure to overseas assets," RIA Capital Markets analyst Nick Stamenkovic told AFP.

However, Rabobank analyst Jane Foley cautioned that the Fed was mindful of weak US inflation.

"The ECB has indicated that it is prepared to throw the kitchen sink in with its attempts to beat deflationary risk and the resultant weakness of euro/dollar will undoubtedly help with the policy's success," she said.

She added: "We do not think that the Fed will hike [rates] until December, based on weak inflation. Consequently we think that euro/dollar will avoid parity."

NICOSIA/FRANKFURT — The European Central Bank (ECB) will launch into quantitative easing (QE) next week having increased its economic growth forecasts for this year and next.

President Mario Draghi said the first bond purchases with new money would take place on March 9.

The eurozone's central bank has said it will buy 60 billion euros a month until September 2016 or until inflation is pushed back towards a target of close to but below 2 per cent.

The ECB, which left interest rates on hold at record lows just above zero at its meeting off-base in Cyprus on Thursday, lifted its growth forecast to 1.5 per cent for this year, from the 1 per cent it predicted in December.

For 2016, growth of 1.9 per cent is now expected, up from a previous 1.5 per cent.

"The latest economic data, and particularly survey evidence available up to February, point to some further improvements in economic activity at the beginning of this year," Draghi told a news conference.

"Looking ahead, we expect the economic recovery to broaden and strengthen gradually," he said.

An analysis of Reuters polls shows more than half the most important economic data reports from the eurozone since the start of the year have beaten the consensus forecast and many have topped the highest prediction.

Germany, Europe's largest economy, has led the way.

Inflation, now running at 0.3 per cent, is forecast at zero  this year rising to 1.8 per cent in 2017. That is sufficiently close to the ECB's target to suggest money printing will not run beyond September 2016.

The bank has a long way to go to convince markets its plans will be effective. Only half of the economists polled by Reuters think bond buying will help inflation rise towards the target of close to but below two per cent and half think the purchases will be extended.

There are tentative signs inflation has bottomed out.

The February reading of 0.3 per cent was above forecasts, oil prices have rebounded from January lows, growth is picking up and the euro hit a fresh 11-year low against the dollar overnight, boosting prospects for higher imported inflation.

"The risks surrounding the economic outlook for the euro area remain on the downside but have diminished following recent monetary policy decisions and the fall in oil prices," Draghi said.

Anticipation of the QE programme has driven eurozone borrowing costs down to the point where Spain can borrow for 10 years at under 1.3 per cent and investors actually pay for the privilege of lending to Germany for five years. Yields in Italy, Spain and Portugal dropped to record lows this week.

Some analysts have suggested the ECB would distort the bond market by buying bonds with negative yields. Draghi said it would only steer clear of bonds yielding less than the ECB's 0.2 per cent deposit rate.

Another concern is whether the ECB will find enough bonds to buy as the market is flush with uninvested cash while banks are under obligation to hold top tier assets, like government debt.

"There may be complexities. We think they are not relevant," Draghi said, noting that more than half eurozone sovereign bonds were held outside the currency area.

Draghi added that the ball was now in the court of eurozone governments who must contribute "decisively" to economic recovery with structural economic reforms.

"Decisive implementation of product and labour market reforms and actions to improve the business environment for firms need to gain momentum in several countries," he indicated. "It is crucial that structural reforms be implemented swiftly, credibly and effectively."

Draghi said the ECB will resume normal lending to Greek banks only when it sees Athens is complying with its bailout programme and is on track to receive a favourable review.

He also made clear the eurozone bank would not raise a limit on Athens' issuance of short-term debt to help leftist Prime Minister Alexis Tsipras avert a funding crunch, since the European Union treaty barred monetary financing of governments.

The tough line, spelled out after the ECB's policymaking Governing Council met in Cyprus, added to pressure on Greece's radical new rulers to implement promised reforms under a bailout they had vowed to scrap but were forced to extend for four months to avoid running out of money.

"The ECB is a rule-based institution. It is not a political institution," Draghi told a news conference in Nicosia.

"The ECB is the first to wish to re-start the financing to the Greek economy provided the conditions are in place, and the conditions are that a process which suggests a successful completion of the review be put in place quickly. That is the condition and we will certainly welcome such a development," he said.

The required measures include pension reform, privatisations and a streamlining of value added tax to which Tsipras' hard left Syriza Party is bitterly opposed.

The troubled sell-off of state assets suffered another blow on Thursday when Greece's top administrative court blocked the sale of a luxury seaside resort outside Athens to an Arab-Turkish fund, court officials said.

The judges ruled the sale of the prime Astir Palace hotel complex and the development of the site breached planning rules and would harm the natural, cultural and urban environment.

Greek unemployment rose slightly to 26 per cent in December, while jobless totals are falling in other eurozone countries that have been through bailout programmes such as Ireland, Spain and Portugal.

Draghi said the central bank had doubled lending to Greece to 100 billion euros in the last two months, equivalent to 68 per cent of the heavily indebted country's economic output, but could not buy Greek bonds under its new asset-buying programme.

Lifeline raised

The ECB increased the ceiling on emergency lending assistance for Greek banks, introduced last month when it stopped accepting Greek government bonds as collateral for funds, by 500 million euros to nearly 69 billion euros.

Draghi said the ECB could only go on authorising this liquidity line as long as the banks were solvent with adequate capital, which remained the case despite massive capital outflows in the last two months due to political uncertainty.

The ECB had asked eurozone members keep a 10 billion euro recapitalisation fund on standby "to face any sudden negative contingency that might materialise now", he added.

Finance Minister Yanis Varoufakis reached a deal with the eurozone, the ECB and the International Monetary Fund (IMF) last week on a four-month extension of a 240 billion euro financial rescue which had been due to expire at the end of February.

However, the creditors have blocked avenues suggested by Athens for temporary state funding in a drive to ensure Greece complies with the deal before any more aid is released.

With tax revenues falling, Varoufakis is trying to scrape together cash from government reserves and state pension and health funds to meet a crucial repayment to the IMF this month.

TEL AVIV — Israel will start buying some fruit and vegetables from the Gaza Strip next week, a partial resumption of imports halted when the Islamist group Hamas took over the Palestinian territory in 2007, Israeli officials said on Thursday.

They said the measure was designed to help a Gaza economy devastated by last year's war with Israel, and to make up for a shortfall in produce from Israeli farmlands left fallow during the current Jewish lunar calendar year in accordance with biblical law.

The move was welcomed by Jamal Abu Al Naja, director of the Gaza Vegetable Production and Export Association, who xpressed hope it would help make up farmers losses and eventually encourage working farms to seek bank funding to expand their production.

Some Palestinian farmers stopped cultivating their fields altogether or sold their land to housing developers after Israeli markets were closed to them in 2007.

Israel, which has been facing international calls to ease its blockade of Gaza, has been gradually relaxing restrictions on commerce across its fortified border since the July-August war which caused widespread destruction in the enclave.

It has allowed Israeli transit of Gaza-produced vegetables and Palestinian merchants to the occupied West Bank, and for Gaza farmers to bring tractors in via Israel since November.

COGAT, the Israeli military agencies that oversees civilian interaction with Gaza, said a shipment of tomatoes and eggplants would be brought in from the territory on Sunday.

"Future stages are expected to include a wider variety of vegetables, totalling 1,000 to 1,500 tonnes. Each tonne is valued at approximately 3,000 shekels ($750)," COGAT indicated in a statement, noting that the imports were scheduled to run the duration of the Jewish calendar year that expires in September.

COGAT deals with civilian authorities but shuns Hamas.

"The steps taken are meant to support the Palestinian population while segregating the Hamas organisation, which is an entity that prevents the reconstruction of Gaza and uses its resources," COGAT head Major-General Yoav Mordechai said.

Abu Al Naja said Israeli authorities had already carried out quality tests on tomato, eggplant, cucumber and zucchini samples.

"If implemented, it will help farmers make up for their losses, increase the number of workers and encourage investment in the agricultural sector," he told Reuters.

Separately, the Hamas-run energy authority said Thursday that Gaza Strip's sole power plant has halted production, following a dispute with the West Bank-based Palestinian Authority (PA) over fuel tax.

Hamas pays the PA for fuel imported to besieged Gaza, but is short of cash and had been unable to cover the additional costs in tax.

In December, Qatar stepped in and donated $10 million (nine million euros) to the PA to cover the tax, effectively exempting Hamas from paying it.

But that money has dried up, and the PA is insisting Hamas begin paying the tax again, the Islamist movement says.

"The power plant stopped producing electricity during the night, after funds from Qatari donations to cover fuel costs ran out," the energy authority said. "We are unable to pay for the fuel because of the taxes on purchasing it."

Gaza is blockaded and controlled by Israel on two of its crossings, and isolated by Egyptian closure of a third.

Israel facilitates the entry of fuel supplies.

A crisis-hit Hamas is unable to pay its own government and security employees due to the blockade and Egypt's closure of the border, with financial restraints hurting the group.

The plant requires 550,000 litres of fuel per day to produce at capacity, the energy authority says.

Even with the plant running, Gaza suffers 12 hours of power outages each day, and that is expected to increase to 18 hours after the plant's shutdown.

Many individual homes have their own generators, and households can purchase, expensively, fuel that comes into Gaza for private consumption.

Hamas and the Palestine Liberation Organisation, which dominates the PA, signed a unity deal in April that was to see the West Bank-based government take over administration and security of the Gaza Strip.

But pending various disputes, including over the payment of Hamas's security forces, the deal has yet to be implemented, and Hamas remains in control of Gaza.

The two sides agreed on a government of independents in June, but progress on reconciliation to fix a years-old split was further delayed by Hamas's war with Israel in July and August.

VIENNA — Vienna, Austria's elegant capital on the Danube River, has again been commended as offering the best quality of life of any city in the world; Baghdad, once more, was deemed the worst to live in.

The consulting firm Mercer said German and Swiss cities also performed well in its annual quality of living rankings. Zurich, Munich, Duesseldorf and Frankfurt remained in the top 10.

Mercer's survey helps companies and organisations determine compensation and hardship allowances for international staff. It uses dozens of criteria such as political stability, healthcare, education, crime, recreation and transport.

With a population of 1.7 million, Vienna topped the survey for the sixth year in a row, boasting a vibrant cultural scene alongside comprehensive healthcare and moderate housing costs.

The Austrian capital's extensive public transport system costs just 1 euro a day for an annual pass. Its Habsburg-era coffeehouses, architecture, palaces, operas and other cultural institutions make it a prime tourist destination.

Europe has seven of the world's top 10 cities in the 2015 survey. New Zealand, Australia and Canada each have a city in the top 10.

Baghdad, the Iraqi capital, was again ranked lowest in the world. Waves of sectarian violence have swept through the city since the American-led invasion in 2003.

BERLIN — Saudi Arabia's oil minister said on Wednesday he expected oil prices, which hit a near six-year low in January, to stabilise, signalling cautious optimistism about the market outlook.

Giving a speech in the German capital, Ali Al Naimi also urged producers outside the Organisation of Petroleum Exporting Countries (OPEC) to help balance the oil market, saying it was not up to Saudi Arabia to subsidise higher-cost producers and that circumstances required non-OPEC to cooperate.

"Going forward, I hope and expect supply and demand to balance and for prices to stabilise," Naimi said. "Global economic growth seems more robust."

The comments are a further sign OPEC's top producer is sticking to its policy to defend market share. 

Last month, Naimi signalled satisfaction with developments, saying he saw oil demand growing and that markets were "calm".

Oil was trading just above $60 a barrel on Wednesday, up more than 30 per cent from a near six-year low close to $45 on January 13.

Prices collapsed from $115 in June due to oversupply, in a decline that deepened after Saudi Arabia and the rest of  OPEC nations at a November meeting refused to cut output.

At the meeting, Saudi Arabia and its Gulf allies argued that the group needed to ride out lower prices in order to defend market share against higher-cost shale oil and other competing supply sources, rather than cut output.

Officials from Russia and some other non-OPEC nations held talks with OPEC ministers on the sidelines of the meeting. But no agreement on cutting supply was reached, OPEC left its output steady and prices fell further.

Oil's drop has hurt smaller OPEC members and hit Russia's economy hard. 

Some in OPEC continue to lobby for output cuts and an emergency OPEC meeting, and last month Igor Sechin, the head of Kremlin-controlled energy giant Rosneft, criticised OPEC for destabilising the oil market.

But Naimi on Wednesday said Saudi would not act alone and he was not aware of any plans for a special OPEC meeting. The next OPEC meeting is not until June.

"In cooperation with many countries, we have moderated production levels to improve the market situation. But now the situation is different. We need every major producer to cooperate," he said.

"It makes absolutely no sense for the most efficient producers to be the ones to cut production when we are only 30 per cent of the producers," the minister added.

He defended OPEC's November decision and said Saudi Arabia would not cut its output unless buyers asked for less.

"In November, OPEC made a historic decision, it did not interfere in the market. I think history will prove that this was the correct path forward," he added.

AMMAN — The European Bank for Reconstruction and Development (EBRD) announced Tuesday in a press statement that it is providing a $30 million loan to MS Pharma Ventures W.L.L. to finance the production of new generic pharmaceutical products.

"Locally manufactured medicines are scarce in Jordan and in the wider region of the Middle East and North Africa. The bank’s investment will contribute to the commercialisation of these products and improve access to the latest generation of pharmaceutical products in the region," the statement said.

It added: "The EBRD loan will help the company to upgrade and expand its manufacturing facilities, increase its capacity and produce specialised products for chronic illnesses such as cancer, or cardiovascular, central nervous system and respiratory diseases."

Heike Harmgart, EBRD head of office in Jordan, said: "Supporting MS Pharma, in line with the bank’s strategy to promote innovation, will contribute to the development of Jordan as a pharmaceutical manufacturing hub in the region and will help boost the production of vital medicines.”

AMMAN – Jordanian billionaire Ziad Manasir slipped in annual ranking of global billionaires released by Forbes magazine this week. 

Manasir ranking dropped sharply from 609 in the 2014 billionaires list to 1,638 this year, according to Forbes, which estimated his fortune at $1.1 billion down from $2.8 billion last year. 

The 49-year old businessman is the owner of Amman-based Manasir Group and the construction firm of  Stroygazconsulting, which has close ties with Russia's state-owned gas producer, Gazprom. 

Forbes attributed the sharp decline in the value of Manasir's fortune to sanctions imposed against Gazprom over Russia's role in eastern Ukraine. 

The sanctions have cut into Manasir's business. 

Forbes said that Stroygazconsulting is implementing a number of projects in Russia that include metro construction in Moscow, the Kolyma highway in Russia's Far East and various sports facilities. 

Other major clients of Stroygazconsulting, besides the gas monopoly, include Rosavtodor, a federal agency behind road construction in Russia.

Manasir was born in Jordan, went to Russia as an exchange student and attended the Azerbaijan Oil and Chemistry Institute, Forbes said, adding that as a student, he began buying and selling computers and cars, and he later moved on to trade in yellow phosphorus, timber and oil products.

In the mid-1990s he bought a construction factory in Tyumen and started building residences for Gazprom workers there.

Manasir owns several large investments in Jordan in the fields of oil and construction.

As he is based in Russia and holds its nationality, Forbes listed Manasir among the richest Russian businesspeople as he came in 73rd place. 

Forbes said that a record of 290 newcomers joined the billionaires list this year. 

Forbes said that Bill Gates' net worth rose to $79.2 billion in 2015 from $76 billion last year to put him at the top of the magazine's list of the world's billionaires for the second consecutive year.

In second place is Mexican telecommunications mogul Carlos Slim Helu, with a net worth of $77.1 billion. 

Next is investor Warren Buffett, who moved up one slot this year with a net worth of $72.7 billion. 

AMMAN – Current prices of shares are attractive and represent a good opportunity for investors to enter the stock market, the chief of Amman bourse told The Jordan Times this week. 

Nader Azar, chief executive officer of Amman Stock Exchange (ASE), said in an interview that some company shares traded in the market are below their par value.

He also mentioned that dividends proposed to shareholders in a number of corporations are another factor that should attract investors.

Azar said the ASE started 2015 with a positive performance as the free float price index closed by the end of February at 2195.5 points, 1.4 per cent higher than 2014 closing. 

He indicated that companies listed on the bourse recorded JD1.2 billion net income before tax for the first three quarters of 2014. The amount is a 7.9 per cent increase compared to the same period of the year 2013. 

"I believe this performance will have a positive effect on the stock prices," he said.

Trading in 2014 

The trading value last year amounted to JD2.3 billion compared to JD3.1 billion in 2013, a 25.2 per cent fall, while the number of shares traded reached 2.3 billion compared to 2.7 billion shares traded in 2013, a 14.2 per cent drop. 

The number of executed transactions declined by 11 per cent to 956,000 from 1.074 million transactions in 2013. 

According to the ASE chief, tensions and instability in neighbouring countries continue to weigh on the Jordanian economy, which already faces many challenges such as vulnerability to fluctuations in the oil market prices, increasing pressure on natural resources, especially water; and escalating spillovers from the conflicts. 

Due to these challenges, the public debt reached a high level and the budget deficit exceeded its anticipated ratio in the past years.  

"These factors affected the ASE performance, especially in 2011," Azar said, describing the effect as unsustainable. 

He added that the ASE is working on facilitating trading and attracting new investors to the market in order to increase the trading value and volume, to give the market more depth and to restore investors’ confidence. 

Market capitalisation and non-Jordanian investors 

Noting that the ASE market capitalisation at the end of 2014 was JD18.1 billion, Azar indicated that non-Jordanian ownership in companies listed on the bourse by the end of last year represented 48.8 per cent of the total market capitalisation, 36 per cent for Arab investors and 12.8 per cent for non-Arabs. 

He described this percentage as one of the highest in the region.

At sub-sector levels, non-Jordanian ownership reached 63.7 per cent in mining and extraction industries, 60.5 per cent in technology and communications, and 60.3 per cent in banking.

The market capitalisation of these three sub-sectors represents 72 per cent of the overall market capitalisation of the ASE, he remarked.

"The high level of foreign investors’ ownership in the market capitalisation reflects their confidence in the stock market," Azar said. 

"The foreign investors’ ownership has been fluctuating narrowly during the past several years, between 46 per cent and 52 per cent, which proves that they are long-term investments stemming from high-level confidence in the ASE and the investment environment in Jordan," he added.

Azar indicated that the total value of shares bought by non-Jordanian investors in 2014 was JD362.7 million, representing 16 per cent of the overall trading value, while the value of shares sold by them amounted to JD384.8 million. 

Trading by individuals 

Referring to latest statistics issued by the Securities Depository Centre, Azar said individuals own 31 per cent of the market capitalisation, while the remaining 69 per cent belongs mainly to companies, institutions, funds, and governments. 

As for trading activity, individuals account for 75 per cent of the total ASE trading. 

Recovery  2015 faster or slower? 

Asked whether he expects the bourse to see faster recovery in 2015, Azar mentioned economic growth and regional conditions, noting that some of these factors are beyond control. 

However, he said the ASE has many projects in the pipeline to moderate the market and to restore investors’ confidence. 

The ASE is part of a joint venture with Muscat, Beirut and Tunisia exchanges; which will implement a new version of the trading system (UTP-Hybrid) developed by NYSE Technologies, he explained, indicating that the ASE plans to demutualise and become a for-profit public shareholding company totally owned by the government as a first step. 

This will bring further benefits for both the ASE and the national economy in the future, the bourse chief said, adding that changing the legal status will provide more flexibility and assist the ASE to diversify services and products as well as conclude agreements with regional and international exchanges. 

According to Azar, the changes will boost ASE competence, liquidity and capacity to attract new investments.

Azar revealed that capital market institutions are currently working with the Lower House economic committee to discuss modifications and amendments to the current temporarily Securities Law of 2002. 

These amendments will pave the way to issuing exchange traded funds (ETFs), demutualisation of the ASE, improving the margin regulations, and improving corporate governance.

The ASE currently is developing a strategic plan for the coming years that will focus on modernising the market up to the international standards, increasing the ASE competitiveness, enhancing the investors’ confidence and raising public awareness. 

"I believe that these developments would boost the confidence of local and international investors at the ASE, and will have a positive impact on the ASE’s performance," he concluded.

AMMAN – The European Bank for Reconstruction and Development (EBRD) on Monday said it will be providing a $20 million credit line to Jordan's Bank al Etihad for on-lending to micro, small and medium-sized enterprises (MSMEs).

In a statement e-mailed to The Jordan Times, the EBRD said it will also extend a trade finance line of $10 million to boost international and intraregional trade.

According to the EBRD, access to finance remains a challenge for Jordanian MSMEs, despite the fact that they account for 95 per cent of active firms in the country; MSMEs provide 70 per cent of total private sector employment and generate approximately 40 per cent of the gross domestic product.

The EBRD is addressing these financial constraints by disbursing the equivalent of $20 million in Jordanian dinars to facilitate access to finance for smaller businesses, which have the potential to contribute significantly to economic growth and employment.