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Cabinet takes measures to boost Amman Stock Exchange

By JT - Jul 10,2016 - Last updated at Jul 10,2016

In this undated file photo, investors are seen following the screen at Amman Stock Exchange. The Cabinet made decisions Sunday to breathe new life into the bourse after eight years of deterioration (File photo)

AMMAN — The Council of Ministers on Sunday agreed to take a set of measures to reinvigorate the Amman Stock Exchange (ASE) to attract investors and stimulate the economy, including restructuring the agency to become a government-owned company.  

The decision was made based on a series of discussions Prime Minister Hani Mulki held with top businessmen and investors and leaders of the commercial sector, the Jordan News Agency, Petra, reported. 

The Cabinet requested the Central Bank of Jordan’s (CBJ) opinion regarding a plan to encourage banks to ease their credit restrictions concerning loan application to invest in the bourse.

In addition, the government directed the Jordan Securities Commission (JSC) to coordinate with the Social Security Corporation’s Investment Fund and national saving funds to work out a mechanism that ensures sound institutional investment in the ASE.

The Cabinet also tasked Finance Minister Omar Malhas to study a suggestion to grant tax incentives to institutional investors in the financial market such as joint funds and others, as such privileges are given to individual investors only. 

The proposed move is meant to boost the competitiveness of the bourse, which has been on a decline since 2008. The market value has dropped during this period from around JD42 billion to just above JD16 billion, according to reports.   

 The measures include listing some government-owned companies in the ASE and forming a committee to study the situation of around 30 stumbling shareholding companies, the Jordan News Agency, Petra, reported. 

The committee is to include as members representatives from the Companies Controller Department, the Finance Ministry, the CBJ and the Jordan chambers of industry and commerce. 

The panel’s mandate is to study the situation of these companies, which have had an adverse impact on the bourse and on investors’ trust, in order to address their problems and identify those which can survive and others that must drop out.

The stimulatory measures also include speeding up the drafting of an insolvency law to create a legal framework that allows companies facing difficulties to restructure their operations and preserve their assets to continue doing business, and pave the way for these firms to secure financing for a limited period until their financial problems are solved. 

Moreover, the Cabinet decided to conduct an impact study regarding a suggestion to give the JSC, ASE and the Securities Depository Centre a free hand in selecting their employees. 

The Cabinet issued directives to the JSC to take necessary action in regard to the use of new tools like the Future Contracts and Exchange Traded Funds tools, in addition to making it mandatory for companies listed in the ASE to observe the good governance rules set by the ASE. 

 

Financial services companies will also be allowed to invest in ASE, according to Petra.  

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