Syria grows into new bourse

Shares of companies in Syria have gained more than 70 per cent last year. This year the exchange is developing initiatives aimed to improve trading, introduce new listings and encourage foreign investment, an exchange official said.

Trading in stocks is relatively new in Syria but the country's index has already outperformed most regional markets.

Efforts are being made to stabilise stock prices and introduce listings and regulations to encourage foreign investment on the Damascus Securities Exchange (DSE), an official said.

"It's all part of developing a very young market," said Anas Jawish, the listing and operations director at the DSE. "We've put forth a series of initiatives to encourage investors to trade in Syrian companies."

The exchange yesterday raised the price limit of trading on an individual stock to 3 from 2 per cent.

Syria only embraced the idea of a public stock exchange in 2009 but the country's index gained 70 per cent last year.

Daily traded value averaged US$800,000 (Dh2.9 million) last year, but was more than $1m in 2009. There was a huge discrepancy between the prices of shares before and after they were floated on the exchange, which led to the index's exaggerated performance, Mr Jawish said.

Shares of companies traded on the unregulated market before listing were being traded significantly higher than their book value. Once listed, stocks took months to catch up to that price, as they were constrained by the limit of a 2 per cent daily rise in value.

The exchange plans to tackle this obstacle by allowing floated companies to have no price limit on the first day to help stabilise the prices of stocks.

There are 20 stocks listed on the DSE, 12 of which are banks, with the rest from the insurance, services, industrial and agriculture sectors. The exchange expects between five and seven companies to go public this year, mostly from the insurance sector.

Investors from elsewhere in the Middle East are taking advantage of Syria's low exposure to the struggling global economy, and the recent reforms including the launch of the stock exchange and opening up of the banking system.

The IMF forecast Syria's real GDP growth at 5.5 per cent this year, up from 5 per cent last year.

Trading is only open to Syrian investors, meaning Arab and foreign investors can only participate in the economy through foreign direct investment.

But as a result of increased attention from foreign investors, the exchange drafted regulations to govern foreign investment in listed stocks of Syrian companies, Mr Jawish said.

The final copy of the regulations is expected to be released to the public by the middle of the year.

"We are currently in discussions with the market's regulator, the central bank of Syria, brokerages and banks involved to develop the regulations required," he said.