The reintroduction of cash transaction regulations created an oversupply of stocks on the market, which had looked to be stabilising. The rules stipulated investors must settle outstanding balances on their margin accounts within five working days, effectively banning brokers from allowing investors to buy now and pay later. 'There's been some chaos since the regulation was introduced,' says an Amman-based analyst. 'People who did not have liquidity started to sell their positions.'

Overwhelmingly negative criticism of the timing of the rule change forced the Jordan Securities Commission (JSC) to backtrack and announce on 20 June that it was postponing enforcement until 2007. Once again, investors can make orders in excess of their margins with their broker's consent and without fear of being fined.

Further instability in the market was created by the simultaneous launch of IPOs of shares in five companies all of which close at the end of June. Shares were offered in Al-Bilad for Financial Investment, Al-Meethaq Real Estate Company, Middle East Company for Investments, Al-Sanabel for Islamic Investment Company and Awtad for Financial & Real Estate Investment. Mobile operator Fastlink, a subsidiary of Kuwait's MTC, and Al-Mazaya Real Estate have also announced they plan IPOs.

But it is not all bad news. 'Right now there's an opportunity to buy,' says the analyst. Companies in the services sector, including investment companies that posted disappointing first quarter earnings because of their exposure to the market, have an average price/earnings ratio (PE) of 10 compared to the market average of 16. The sector dominates the bourse in terms of number of companies and trading volumes.

And other sectors appear attractive. 'A lot of people are looking at industrial and manufacturing companies, which appear to have more opportunity to grow and seem undervalued,' says the analyst. Industrial sector stocks have an average PE of 15. 'Many companies depend on investment income. It would be better for investors to find companies that depend on operations rather than portfolios,' says the analyst.