Jordan's Enron - Atlas Market Brief Feb 07, 2002

The market has finally emerged from its prolonged losing streak. For the first time since mid-January, prices finally recovered on Wednesday as a fresh wave of demand stimulated the market and pushed the AMI up to 115.26. The rumor machine has been working overtime this past week or so, as information slowly trickled out regarding one of the potentially largest fraud cases in Jordan's banking history. The complex case, which has been festering for several weeks now, began to surface among the general public only recently and began immediately to take on a life of its own, hitting hard the share prices of several banks. Jordan National Bank (JONB) and Jordan Investment and Finance Bank (JIFB) saw their prices hammered by 14% and 21%, respectively, as investors, thirsty for accurate information, took no chances. It is not yet clear what the total size of credit facilities in question are, however, many observers are bracing for more bad news as the case unravels. With the help of a fresh round of earning announcements, investors jumped out of these banks' stocks and into better performing companies pushing prices to higher levels.

While the exposed banks suffered from these events, others gained against the backdrop of last year's market performance. Bank of Jordan (BOJX), the biggest advancer of 2001, made its results public with its profits rising to JD14.4 million compared to JD5 million the year before. It also publicized plans for a one-for-two bonus share issue. Export and Finance Bank (EXFB)'s announced results, on the other hand, showed a 75% jump in after tax earnings. Similarly, EXFB also revealed plans to raise its paid up capital to JD30 million by distributing 4.7 million shares to its existing shareholders. These results managed to pull the stocks out of negative territory to end the week unchanged.

Meanwhile, fresh speculation on privatization candidates Arab Potash (APOT) and Jordan Phosphate Mines (JOPH) mounted as news on their performance surfaced. While APOT's profits increased by some 18% to JD34 million, JOPH is expected to record profits for the first time since 1998. While most industrial companies ended the week with slight losses, APOT closed 4% higher, while JOPH gained 7%.