Strikes worsen as Amman stock declines

13 June 2011

Workers at the exchange are frustrated with paycuts

The Amman Stock Exchange (ASE) has experienced some volatility since early-May after employees of the capital markets institutions went on strike following the government’s decision to restructure the public sector.

On 5 May, the government announced new reforms for public-sector institutions, which included a 50 per cent pay cut for the capital markets institutions staff and stripping of all benefits. It comes as part of the government’s austerity measures to meet financing needs and address the budget deficit, which currently stands at about JD1bn ($1.4bn).

“We have maintained our service to the public and to the investors. We have not suspended trading and hopefully this will not continue for a long time. We hope the government will understand the demands of the employees,” says Jalil Tarif, chief executive officer of the ASE.

The homepage of the ASE website has been replaced with an announcement explaining the frustrations of the workers who have been on strike since 31 May.  

“The mentioned decision affected the financial rights of the staff of these institutions, the drastic decrease of their salaries caused many to submit their resignations, which will subject the capital market to unavoidable risks,” reads the statement.

Since the beginning of June, workers have camped outside the ASE building, refusing to work.  “We do not want to cause damage to the economy, so some of us are still trading, but all we have done is take away the tickers and replaced it with our message,” says one trader who asked not to be named.

“Some of us have loans to pay off, we have children, we have duties, cutting our salaries by 50 per cent is too much,” he adds.

Average daily trading volumes from 5-9 June was JD11.1m decreasing by 13.6 per cent compared with the previous week. The total trading volume during the week reached JD55.3m compared with JD64m during the last week.

As trading is done remotely and through the internet, the bourse has not been affected too much, but it has added to the downwards trend. “I hope we will not reach a point where trading is suspended. It will have a very negative impact on the capital markets and the economy and would really imply a very negative image on Jordan, but it is unlikely to happen,” says Tarif.

The ASE has suffered in recent years with a lack of liquidity and decreasing investor confidence. By the end of 2010, the bourse had lost almost 40 per cent due to the global financial crisis.

“Since the beginning of the year, we’ve witnessed improvement in the market. In the first few weeks of the year we gained 6-7 per cent, but the market has absorbed the uprisings in neighbouring countries and we have lost almost 8 per cent of the general price index,” says Tarif.  

The impact has affected the sentiment of both local and foreign investors, which make up 50 per cent of total capital on the bourse (34 per cent are Arab investors). According to Tarif, the market has stabilised at the moment, but the approach of investors is to wait and see, due to the continuing unrest in the region and further proposed political and economic reforms in Jordan.

The shares price index closed at 2149.0 points on 9 June, compared with 2152.0 points for the last week, a decrease of 0.14 per cent. A total of 81.2 million shares were traded.

The shares of 187 companies were traded, the shares prices of 63 firms rose and the shares prices of 97 companies declined.

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