Booming Banks

Weekly Commentary (22 - 26 July).

Jordan's largest institutional investor, the Social Security Corporation (SSC), has acquired Kuwait Investment Authority (KIA)'s 400,000 shares in the Arab Bank (ARBK). The deal, which was executed on Monday at a price of JD170.75, is the largest single trade executed on the bourse in history. In a press conference following the deal, the fund's chairman announced that the decision to increase its holdings in ARBK to around 9.8% came on the heals of impressive semi-annual results for 2001; keeping in mind that SSC has been sitting on a huge pile of cash, earning little interest at local banks. The chairman also reassured investors that KIA's decision to divest its holdings in the bank was non strategic, and that KIA has been liquidating its investments worldwide.

The transaction, worth around JD69 million, spilled over onto other stocks as trading activity took off throughout the week. It also boosted confidence as investors jumped into a number of stocks and pushed the AMI up 1.25 points to 93.89. Total value traded was around JD83 million with some 6 million shares changing hands.

The banking sector in general was exceptionally active this week. In addition to the bloc trade, the Housing Bank for Trade and Finance (THBK) and Jordan National Bank (JONB), each had a value traded in excess of JD2 million.

Jordan Kuwait Bank (JOKB), on the other hand, released its results for the first half of this year. Interest income jumped 39% to reach around JD9.46 million, while earnings rose by almost JD1.18 million to add up to JD4.43 million. JOKB was among the week's biggest climbers, albeit having a very modest trading volume.

International Tobacco and Cigarettes (ITCC) soared this week as it hit JD1.52, as more than 400,000 of its shares traded this week alone. Also in the tobacco sector, Union Tobacco and Cigarettes made a slight rise in its price; it closed 2% higher.

Market hotrod, Jordan Steel (JOST) also released its first half earnings; it reported earnings of JD1.95 million, climbing some 173% over last year's. The announcement sent its price sky-high on Thursday when it closed at JD1.19. National Steel (NAST), the only other listed steel company, also made exceptional gains in the week as it closed 7% higher at JD1.05.