Amman Stock Exchange

Jalil Tarif

Chief Executive Officer AMEDA Meeting Dead Sea - Jordan October 2007

History of Capital Market

1930s

Trading in Securities started informally.

1976

Amman Financial Market (AFM) was established.

1978

AFM started operations.

1997

Capital Market Reforms introduced, Securities Law issued.

1997

Jordan Securities Commission (JSC) was established.

1999

Amman Stock Exchange (ASE) was established.

1999

Securities Depository Center (SDC) was established

2002

New Securities Law Issued.

Amman Stock Exchange

Capital Market in Jordan

Jordan Securities Commission (1997) Amman Stock Exchange (1999) Securities Depository Center (1999) Public Shareholding Companies Certified Financial Professionals Mutual Funds Financial Services Companies

Financial Brokerage Investment Trusteeship Investment Management Financial Advisory Management of Primary Issues Custodian

Amman Stock Exchange (ASE)

 Established in March 1999  Independent legal entity  Managed by private sector  Membership of brokers  Non for-profit Amman Stock Exchange

Securities Listing Requirements

First Market

Financial Position Requirements:

Profitability Dividends ( Cash or Stock) Second Market

Right to Commence Operations Financial Reporting:

Annual Report Semi Annual Report

Liquidity Requirements:

Free Float Turnover Trading Days Number of shareholders Continuous Listing Requirements

Financial Reporting:

Annual Report Semi Annual Report Quarterly Report Amman Stock Exchange Bonds Government and Corporate Bonds are eligible for listing

Trading System Overview

Backup Trading Floor Surveillance Remote Brokers Production Servers CONNECTION Fiber Optics Leased Lines FACILITIES Remote Trading Remote Inquiry Intranet Amman Stock Exchange (NSC) (GL) UNIX BOX High Availability Cluster Powerful Dual Processor

Hosts

Main Database Trading System

Users

Trading Floor Surveillance Information Dissemination Websites TV Channels Data Vendors Mobile Phones Market Monitors Information Display Screens

Information Dissemination

 ASE disseminates clear, accurate, sufficient and timely information and data on securities trading.

 ASE discloses information on issuers, members, and material information. Public may have access to these material.

 Data disseminated through GL stations, data vendors, market watch, ASE website, and TV stations.

 Times of transactions information posted at the ASE site.

 Post trade data sent to brokers through Domino.

Amman Stock Exchange

http://www.exchange.jo

ASE Market Capitalization & Trading Value

40000 35000 30000 25000 20000 15000 10000 5000 0 2000

* End of September

2001 2002 2003 2004 2005 2006 2007*

Trading Value Market Cap

Average Daily No. of Transactions

2007* 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 547 1226 638 564 812 1801 * End of September Amman Stock Exchange 3262 4789 9805 13580 14224

ASE Performance

120 100 80 -20 -40 -60 60 40 20 0 1998 1999 2000 2001 2002 * End of September ASE General Weighted Index 2003 2004 2005 Emerging Market Composite Index 2006 Amman Stock Exchange 2007*

Primary Market

5000 4500 4000 3500 3000 2500 2000 1500 1000 500 0 1999 2000 2001 2002

Primary Issues

2003 2004 2005

ASE General Index * End of September Amman Stock Exchange

2006 2007* 9000 8000 7000 6000 5000 4000 3000 2000 1000

Market Velocity

20 10 0 80 70 60 50 40 30 2000 2001 * End of September Amman Stock Exchange 2002 2003 2004 2005 2006 2007*

50 20 10 40 30 0 2001 2002 * End of September Amman Stock Exchange

The Market P/E Ratio

2003 2004 Historical Average = 17 2005 2006 2007*

Non-Jordanian Ownership, September 2007

48 46 44 42 40 38 36 2001 2002 2003 2004 2005 2006 2007

Amman Stock Exchange

Recent Study by IMF

 Investors may be able to achieve additional diversification by investing in the ASE  On a risk-adjusted basis (Sharp Ratio),the ASE outperformed most markets.

 ASE compares favorably with many other regional markets in terms of investment climate.

 Low price volatility.

Amman Stock Exchange

Permissible Equity Markets Investment Analysis, CalPERS

Country Macro-Factors

Political Stability Transparency Productive Labor Practices

Market Macro-Factors

Market Liquidity and Volatility Transparency Market Regulation/Legal System/Investor Protection Capital Market Openness Settlement Proficiency/ Transaction Costs Poland Israel South Korea Chile Czech Republic South Africa Taiwan Hungary Mexico Malaysia Brazil

Jordan

India Thailand Turkey Peru Argentina Philippines Colombia China Morocco Sri Lanka Venezuela Indonesia Russia Egypt Pakistan

Future Plans

 Jordan National Financial Center Project  Upgrading the trading system  Internet trading.

 Demutualization  New ASE Dow Jones Index Amman Stock Exchange

Jordan National Financial Center Project

 The Center will contain:  ASE  SDC  Financial Studies Center  Brokers’ Offices  Investors Gallery  Other facilities  The Center total area 85758 m 2 .(Buildings area 51766 m 2 )  Total cost US$ 100 million  Expected completion date November 2009 Amman Stock Exchange

Amman Stock Exchange

Project’s Site

Amman Stock Exchange

Project’s Concept

The external design of the building is inspired from the Siqq of Petra which is considered an ancient symbol in Jordan’s history.

Jordan National Financial Center Project

Amman Stock Exchange

Upgrading the Trading System

 A contract was signed with AtosEuronext Market Solutions and GL Trade for Euro 2.5 million.

 New trading system V900.

 Fully Linux environment.

 System applied in major stock exchanges.

 Better flexibility to implement market rules.

 Highly improve system capacity and lower latency.

 The new system will be up and running by May 2008.

Amman Stock Exchange

Demutualization

 The new Securities Law for 2002 authorized setting up other stock exchanges  The ASE may be restructured by a decision of the Board of Commissioners of the JSC, upon approval of the Council of Ministers.

 Negotiations are taking place with alliances to support demutualization process.

 The ASE shall become shareholding company totally owned by the Government as a first step.

 The Government then shall sell a share to financial institutions, brokerage firms, international institutions and other parties.

Amman Stock Exchange

New ASE Dow Jones Index.

 An agreement with Dow Jones was signed in late 2006  Dow Jones will calculate a new composite index, named “The Amman Stock Exchange and Dow Jones”.  The new index will be weighted by market capitalization of free float shares.

 The index can be used as a base tool in forming financial derivatives and ETFs.

 The index will be launched in late 2007.

Amman Stock Exchange

Other Projects

 Internet Trading.

 Joining the WFE.

 Codes of Corporate Governance  Introducing new instruments.

 Marketing strategy.

Amman Stock Exchange

International Exposure

Amman Stock Exchange

Investment Opportunities

Privatization Political Stability Free repatriation of investment and income No ceiling on foreign equity ownership No taxes on cash dividends No capital gains tax Economic Openness and Free Trade Amman Stock Exchange