1. As we kick off the year 2020, please can you look further into the future, and share your predictions on what the Jordanian market infrastructure industry might look and feel like by 2025?
Despite the fact that there is uncertainty about the world economy, as you know, stock exchanges are vulnerable to the political and economic challenges of their respective countries in addition to the surrounding countries. Besides that, there are some challenges for stock markets which can be considered huge and might affect the economies and stock exchanges.
However, some of the most important macro trends that might affect the stock market in 2020 are as follows:
- The Global economy: The global economic activity remains weak and widely affected by political polarization, and the high budget deficit and public debt and the great reliance on external borrowing. The global growth was about 2.4 percent for 2019, its lowest level since 2008–09. Also, the effects of the shocks to oil prices, and rising spending needs, particularly in countries affected by what is so called the Arab spring, have resulted in raising the public debt.
- World Trade: Rising trade tensions, increased the uncertainty about the future of the global trading system and international cooperation
- The Political situation: The Political situation and conflicts in the region which have heavily impacted the region’s economies and in particular oil prices.
Luckily, the political situation in Jordan is stable. However, the Jordanian economy is facing challenges that are mainly due to the high budget deficit and public debt. These challenges were worsened by the political situations in the region and the government is working on bringing the economy indicators back to acceptable levels. Since the stock exchange is a mirror that reflects economic activities and expectations, the ASE has been affected by these circumstances which put huge pressure on the capital market and resulted in undesired implications characterised by the decrease in the confidence in the market and shrinkage of liquidity directed to the investment in securities.
People might believe that experts have crystal balls which allow them to see how the stock market is going to perform in the future. But this is very hard to predict, because of the uncertain future that we might have.
However, and despite the challenges, we believe that in light of the improvement in certain macroeconomic indicators, the implementation of the government plans and incentives packages, the implementation of the stock exchange strategic plans and measures taken, and efforts to resolve the tension in regional countries. We are optimistic that we will overcome all the challenges that we are facing such as the decrease in the financial market confidence, the significant decrease in the market liquidity, and the decrease in the IPOs (no new public shareholding company has been established since 2009).
2. And how is your firm getting ready for the changes you’ve outlined above?
The ASE has plans to enhance the infrastructure of the market and the investment climate.
The ASE plan for the next 12 months is to launch a new disclosure system called the XBRL during the first quarter of 2020, and launch a new trading system through its contract with Euronext by the end of first quarter of 2020. ASE has an issuer’s outreach program directed at the unlisted private companies to list their shares on the market. ASE will conduct this campaign in cooperation with EBRD to attract those unlisted companies to be listed. ASE will pursue its efforts to enhance listed companies compliance with corporate governance rules by introducing the scorecard and providing positive publicity for the best run companies. Also, ASE is working on its first report on Sustainability to be issued this year 2020 as one of the main projects to be implemented in its strategic plan.
In addition to that, ASE has issued some introductory publications about sustainability such as Guidance on Sustainability Reporting 2018 in both languages Arabic and English in order to give the guidance for the listed companies to prepare the sustainability report which includes sustainability importance, companies' disclosure for sustainability, and financial reports besides the most important sustainability measures and the international standards in this domain.
Moreover, the ASE has met all MSCI requirements except for the liquidity requirement which is beyond the control of ASE. However, we are trying to find a solution in corporation with the EBRD through ASE’s roadmap.
The ASE will continue implementation of its strategic roadmap to enhance confidence in the market. ASE will work in cooperation with government, public shareholding companies, and related parties to promote the market through well designed roadshows.
3. Entering a new decade is not just about looking ahead; it’s also a good time for reflecting on the past. What’s the top lesson you’ve personally learned from the past ten years?
As the CEO of the Stock Exchange and an Ex-Commissioner, I have learned a lot of lessons from the past ten years. Most notable lessons include the following in brief:
- A recipe of a mixture of lessons for the institution such as:
- Build strong regulatory and technical infrastructure.
- Enhance your institution with capacity building.
- A strategic plan to be in line with the latest standards and best practices among markets.
- Do not tolerate market fraudulent activities and misconduct.
- Always be prepared for plan B or for any crisis as crisis never comes from where we might expect.
In addition, there are lessons that can be obtained from the challenging and competitive stock market environment such as:
- be prepared for the digitization of the stock market and fintech;
- introduce new products and instruments;
- enhance investor protection and good corporate governance practices; and
- increase cooperation with regional and international counterparts.