Talal Abu-Ghazaleh Knowledge Forum Organizes Seminar on Policies to Revive ASE

03-Jan-2018

AMMAN - Deputizing for Prime Minister Dr. Hani Al-Mulki, Minister of State for Investment Affairs HE Mr. Muhannad Shehadeh patronized a seminar organized by Talal Abu-Ghazaleh Knowledge Forum (TAGKF) entitled "Policies and Means to Revive Amman Stock Exchange”, in the presence of HE Dr. Talal Abu-Ghazaleh.



Dr. Talal Abu-Ghazaleh

Dr. Talal Abu-Ghazaleh, chairman of TAGKF, expressed that "what we need today is to focus on small enterprises rather than big ones. Big enterprises are supported by different entities including the media and the government; unlike small enterprises."

Dr. Abu-Ghazaleh added: "Investment in small enterprises is important because they employ more than 80% of the workforce and innovation opportunities are available in these enterprises. In addition, innovation in enterprises is achieved today by the individual, and the world is moving from the civil state to the innovation state which requires us to focus particular attention on individual innovation."

He added that "the stock exchange is marginalized in Jordan; particularly in media. Thus, the national economy in this field needs support."

Muhannad Shehadeh

Shehadeh stressed the importance of the seminar and the papers presented therein, which cover a number of important aspects to promote ASE, as well as highlighting the need to set an insolvency law, establish equality between individuals and companies and find tax incentives.

He also questioned  "Are there opportunities for the investor? Are these opportunities promoted? So that we can promote an investment environment in ASE"

Additionally, he stressed the need to find incentives for investments that lead to clear investment opportunities in the market in response to investors’ needs, hence calling for the creation of a culture of stock and diversification, the change of deposits and investment portfolios and the provision of professional investment portfolios for companies.

"The intellectual and knowledge economy is based on several pillars including the promotion of the knowledge economy and we are approaching the fourth industrial revolution that is based on the knowledge economy," he added.

Mohammed Saleh Hourani

Chairman of the Board of Commissioners of Jordan Securities Commission (JSC) Mohammed Saleh Hourani presented a paper entitled "Stock Exchange: Reality and Aspirations" that discusses the reasons behind the decline in the performance of the stock exchange, the negative impacts of regional and international security and economic shocks on the national economy and the stock exchange, the policies and procedures taken by the JSC in this regard and suggestions to develop the market, its competitiveness and its ability to face past and future risks and crises.



He stated that "the downsides included the decline in the share price index, the market value of the traded companies' shares, the average daily trading volume and the movement of foreign institutional investment to the competitor's regional exchange which resulted in a drop in the classification of the Jordan Stock Exchange by Morgan Stanley from an emerging market to a developing market."

Al-Hourani attributed this decline in the market to the successive shocks faced by the national economy such as the 2008 global economic and financial crisis, repercussions of the Arab Spring and regional security and political disturbances. These have affected the national economy in terms of decline in the economic growth rate, increase in the budget deficit and thus the indebtedness as well as the decline in  foreign investment flow. This resulted in the decline in liquidity and credit facilities directed to the market;  additionally, the current income tax law has stopped granting tax advantages to investors in the Islamic instruments and mutual funds. Instead, these advantages are granted to individual investors only; encouraging this type of investment rather than the institutional one and weakening ASE's competitiveness compared to regional stock markets.



In his paper, he recommends the need for measures to help revive the stock exchange such as exemption of  profits and dividends and profits of securities trading of mutual funds from income tax, the inclusion of some of the state-owned companies' shares in the stock exchange, expediting the issuance of corporate law and insolvency and bankruptcy law, expansion in directing part of the government bonds and Islamic instruments to public debt instruments, the encouragement of banks and investment and saving funds to promote institutional investment by creating mutual funds and standardizing the juristic standards governing the deals under Islamic investment.

Jawad Anani

For his part, Chairman of the Board of Directors of ASE Dr. Jawad Al Anani said: "ASE is in deep sleep and must be revived. The relationship between the existing investment and the status of ASE is reflected in the financial instruments of the market."

"Linking the provision of job opportunities to the increase in growth and the achievement of economic independence, ASE becomes a mirror to the economic status and supports that trend. This link must be established in our minds to promote investment," he added.

He also stated, "Offers have been provided by four major companies to conduct an accurate and independent evaluation of ASE. Then, we will start negotiating partnership with one of the world's leading markets and put up a part of our shares for trading.”

Mohammad Hamami

In his paper, Chairman of the Board of Directors of Securities Depository Center (SDC) Mohammad Said Hammami stated that "The Jordanian capital market system including JSC, ASE and SDC complies with the best practices in the organization of world financial markets."

He explained that the best practices in the Depository Center are demonstrated by delivery versus payment, adding that clearing operations are final and irrevocable for raising confidence in investment in the financial market, noting that the settlement and payment processes are part of the national payment system.

Ramzi Nuzha

General Controller of Companies Ramzi Nuzha said: "The financial market is one of the most important indicators of the national economy of any country. ASE plays a crucial role in the Jordanian economy and needs to be revived with no doubt. Changing the registration of ASE to a public shareholding company would constitute a first step in the market’s revival."

He also stated, "The Companies Control Department has started many projects that contribute to enhancement of the quality of provided services and compliance with the world's best practices in order to raise Jordan's rank in international reports. These projects include the amendment of corporate law focusing on reforms to promote the work environment, to provide more protection to minority shareholders and to promote the equal treatment of shareholders and government. To achieve this amendment, public shareholding companies have been obliged to implement the rules of governance. However, private shareholding companies whose capital exceeds Five hundred thousand dinars have been prevented from combining the position of the board chairperson with the position of the general manager, assistant or deputy. On the other hand, instructions have been issued on the supervision of general assembly meetings in public shareholding companies and on companies liquidation systems that govern terms of the liquidation period, work and wage of the liquidator and reduces the burden put on the judiciary regarding the compulsory liquidation of the companies in question."

Adli Kandah

In his paper, Director General of Association of Banks in Jordan Dr. Adli Kandah analyzes the real reasons behind the decline of ASE during 2007-2016 by reviewing its main indicators including the increase in the number of the companies listed in the stock exchange, the general index of listed share prices, the index of all sectors and the market value of listed companies and their percentage of GDP. In addition, he included an analysis of trading in the stock exchange and the percentage of contribution by non-Jordanian investors.

He also presented the main indices of the companies listed in ASE in terms of total assets and debt ratio as well as the indices of profitability and market for public shareholding companies.

The paper tackled the most important institutional and legislative developments in the Jordanian financial market including registering ASE as a state-owned public shareholding company, instructions on governance for public shareholding companies, securities listings in ASE and the organization of the trading of securities not listed in ASE.

He also tackled the most important policies and suggested methods for reviving the ASE which include legislative aspects, institutional framework, macroeconomics, other aspects related to JSC and ASE and others related to individual and institutional investors.