Analysts and brokers attributed Monday's slump of Amman Stock Exchange (ASE), which dived by 4.28 percent to 3,781 points, to the uncertainty over the U.S. huge bailout plan to avert global financial meltdown, local daily The Jordan Times reported on Tuesday.
"It is too early to judge whether the U.S. rescue plan would succeed in lessening the impact of the global financial crisis or not, but investors are in panic and they are selling, saying they will not wait to see the results of the plan," Jawad Kharouf, president of the Association of Certified Capital Market Professionals, said on Monday.
"What is taking the ASE down is investors' psychology affected by the turmoil in the global financial markets and margin trading, " said Kharouf, adding that the trend of the ASE will be determined at this stage by developments of the U.S. stock market.
However, Kharouf and Nasser Barghouthi, director of a brokerage house affiliated to the Industrial Development Bank, agreed that the drop in the ASE is illogical.
"There is some sense when banks' shares go down under the circumstances because it is the financial and the banking sector that is tumbling across the world. But why should the prices of phosphate, potash, steel and petrol companies drop? There is no logical explanation for that," said Kharouf.
"Prices of several shares are undervalued at the ASE and it is a good time to buy because sooner or later the market will go up," said Barghouthi.
"We expect an influx of foreign investment at this stage, especially since the ASE is an emerging market, where the losses can be minimal," he added.
Bassam Saket, executive chairman of Jordan Securities Commission, said the local financial market is safer for investments than foreign markets as it is protected by monitoring, transparency and constant financial disclosure.
Copyright 2008 XINHUA NEWS AGENCY
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