Amman Stock Exchange Faces Historic Recession

Amman Stock Exchange Faces Historic Recession

 

Al-Anbat – Amman

 

Amid rapidly shifting economic dynamics in the region, the Amman Stock Exchange (ASE) stands at a real crossroads. With declining foreign investments and a lack of financial innovation, the market risks losing its appeal and competitiveness.

 

Economic and investment expert Wajdi Al-Mukhammrah affirmed that ASE is currently facing two major challenges: a decline in foreign portfolio investments and an absence of innovative financial products, both of which are negatively impacting on its attractiveness and its ability to draw in new investors under the turbulent regional and global economic conditions.

 

Speaking to Al-Anbat, Al-Mukhammrah stressed that developing a comprehensive strategy has become urgent to revitalize Jordan's financial market, outlining the key challenges currently facing the bourse.

 

He explained that the first challenge is the decline in foreign investments, driven by regional instability and the repercussions of geopolitical crises, as well as intense competition from other emerging markets such as Saudi Arabia and the UAE, which offer tax incentives and advanced financial infrastructure. He also pointed out the limited transparency and slower trading procedures compared to global exchanges.

 

The second challenge, according to Al-Mukhammrah, is the absence of new financial products, with the exchange still relying on traditional tools like stocks and bonds which are fixed-income financial instruments that represent a loan made by an investor to a borrower, , without introducing modern instruments such as derivatives, Exchange-Traded Funds (ETFs), Real Estate Investment Trusts (REITs), or green and Islamic-compliant bonds.

 

Regarding proposed solutions, Al-Mukhammrah called for:

 

Enhancing the regulatory environment and transparency by expediting legislative reforms to simplify listing and trading procedures, applying international financial disclosure standards such as IFRS, and developing an advanced bilingual electronic trading platform.

 

Diversifying financial products through introducing derivatives to hedge against market volatility, encouraging sector-focused investment funds in technology and renewable energy, and developing green bonds to support environmental projects in cooperation with the Central Bank of Jordan.

 

Supporting small and medium-sized enterprises (SMEs) by offering tax incentives, reducing listing costs, and creating an alternative market with flexible regulations to support startups.

 

Stimulating local investment through financial literacy campaigns in partnership with universities and media and launching tailored investment programs for small investors.

 

Adopting financial technology (FinTech) by utilizing blockchain to enhance transaction security and developing smart trading applications accessible via smartphones.

 

Strengthening regional and international cooperation through partnerships with Arab exchanges, such as Saudi Arabia’s Tadawul, to launch joint products and participating in global investment promotion platforms to showcase opportunities within the Jordanian market.

 

Al-Mukhammrah added: "Reviving ASE requires an integrated plan that combines structural reform, financial innovation, and technological advancement. Although declining foreign investment is a major challenge, diversifying products and boosting local participation can compensate for this decline.”

 

He urged cooperation among government agencies, the private sector, and the financial community to transform these challenges into opportunities, restoring Jordan’s position on the regional investment map. He noted that trading volumes have declined significantly, with no new public shareholding companies listed in over ten years, alongside deteriorating brokerage firms and weakened regional competitiveness.

 

Al-Mukhammrah called on the government to take urgent actions to revitalize the bourse by appointing highly qualified professionals at the Securities Commission, the exchange itself, and the Securities Depository Centre, especially as many experienced staff have moved to regional exchanges. He also urged consultations with banks to establish mutual investment funds after removing existing legal and tax obstacles, ensuring that part of citizens’ deposits are channeled into these funds and the stock market, thus injecting fresh liquidity.

 

He emphasized the importance of merging small brokerage firms at risk of collapse, stating that consolidation would increase their capital and solve receivables issues, while reducing trading commissions and taxes would stimulate market activity.

 

Furthermore, Al-Mukhammrah stressed the need to conduct promotional visits to investment funds in the Gulf, London, and the United States to present investment opportunities, particularly in major blue-chip stocks. "Selling a stake in ASE to a global exchange could be a logical decision under current conditions, attracting international expertise and placing the Jordanian exchange on the global investment map,” he added.

 

He explained that Arab investments remain a fundamental pillar supporting ASE, calling for attracting more of these investments, especially in light of the major strategic projects targeted by the Economic Modernization Vision, such as the National Carrier Project, the railway project, and the utilization of natural resources like copper and uranium.

 

In conclusion, Al-Mukhammrah affirmed that Jordan’s political and economic stability is a strong lever for attracting investments, along with good governance, minimizing bureaucracy, and a developed banking sector that meets investors’ needs and ensures the smooth and free transfer of funds.