Arab markets must move more in line with the criteria applied in international financial centres, says the chief executive of the Amman Stock Exchange.
“Arab financial markets have the potential to accommodate world changes,” said Jalil Tarif (pictured above).
“The remaining restrictions on investment in the region should be removed. I believe some Arab markets have restrictions on the movement of foreign currencies.These restrictions have to be removed to encourage foreign investment. Fear of foreign investment is unjustifiable since it has positive aspects that should be encouraged and made use of.”
The head of the Jordanian capital’s exchange said some Arab markets had managed to attract a high level of foreign investment.
“This is the case in Jordan where foreign investment represents more than half the market – non-Jordanians own between $15 billion (Dh55bn) and $17bn. This is what we have to work to encourage – especially as long-term investment.”
He said the volume of initial public offerings in Jordan over the past five years exceeded $10bn, a fact that had a significant effect on job opportunities and development in the whole Arab region.
Tarif spoke to Emirates Business while attending the sixth Developing Markets Forum, organised by the World Federation of Exchanges, in Cairo, Egypt.
He praised the achievements of Arab financial markets in the areas of disclosure, transparency and infrastructure. But he said they faced the challenge of dealing with greater volatility than was seen elsewhere. He attributed the higher volatility to factors related to supply and demand.
“Arab financial markets are small – they are worth only $1.4 trillion – which is less than one per cent of the total volume of international exchanges,” he said.
“More privatisation programmes are required in the region as well as less government intervention and the removal of obstacles that impede inter-Arab investment and transactions between the Arab World and other countries.”
Tarif called on the Gulf countries whose currencies are pegged to the dollar to design and adjust their monetary policies for the benefit of their economies and for greater stability.
“There is no general recipe that can be used for every country’s monetary policies,” Tarif said.
“Gulf monetary authorities are capable of accommodating the retreat in the dollar’s exchange value and treating its inflationary impact through their central banks by controlling interest and exchange rates.”
Tarif said though no figures were available to show the impact on Arab markets of America’s sub-prime crisis, the price of oil, the dollar exchange rate and interest levels would all be affected.
He stressed the need to focus on awareness and education so all sectors of society understood the importance of investment and exchanges, which had become important tools of development.
Tarif also emphasised the role of information technology and the internet in opening up markets.