Stock Market Opens: Historic Day for Syrian Capitalism

Syria’s stock market is back four decades after President Nasser closed it down and introduced socialism to Syria during the period of the United Arab Republic. Trading on Tuesday, the first day, was confined to one company of the 6 listed: Banque Bemo Saudi Franci. the other companies are Bank of Syria and Overseas, United Group for Publishing, Advertising and Marketing, Arab Bank-Syria, Alahlia Company for Transport, and Bank Audi-Syria. About 20 companies are expected to be listed by the end of the year.

BASIL AL-HAMWI: We are moving from the frontier market to an emerging market. Come March 8th, with the opening of the DSE, we would have banks, we would have large private sector projects, and we would have a securities exchange.

Economist Samir Saifan says brokers and investors will just have to weather the growing pains because the Damascus Securities Exchange is desperately needed. He says Syria has the opposite problem from the rest of the world. There’s no lack of liquidity here; there’s actually a surplus. But here, there’s nothing to do with it.

SAMIR SAIFAN: There is lack of finance in Syria. Until now, the finance from governmental banks is still very costly. The collateral is very high and it’s a kind of obstacle. More than 90% of the businessmen, they don’t have loans from banks. Where, in other country, the bank is partner with all businessmen.

The Syrian Stock Exchange: Success Hinges on the United States

INSS Insight No. 97, March 9, 2009
Feldman, Nizan

After three years of repeated delays, Syria is scheduled this week to launch trading on the Damascus stock exchange. Had the authorities advanced the gala opening slightly and had investors been able to raise capital from foreign investors starting a few weeks ago, presumably their shares would have registered nice gains in light of Senator John Kerry’s visit to Damascus. Even though the Syrian regime has argued stubbornly for the last four years that the economic war waged by the Bush administration against Syria is not causing the state any serious damage, signs of a possible thaw in relations between Washington and Damascus are some of the best news that investors considering potential opportunities in Syria could have hoped for.

In recent years Syrian economic policymakers have earned much praise from International Monetary (IMF) economists, who noted in their reports that the government is spearheading – albeit slowly – crucial steps toward liberalization that will enable Syria to deal with the consistent decline in oil reserves. The rate of oil production in Syria, which only ten years ago stood at over 600,000 barrels a day, shrank dozens of percent and currently does not exceed 380,000 barrels per day. Income from the sale of oil still constitutes over 20 percent of the state’s income, but if the payments to foreign oil companies are factored in, it can be argued that already starting in 2007 Syria in effect had become a net importer of oil. The planned opening of the stock exchange is another key pillar of Syria’s efforts to develop a financial system that will make it possible to finance the development and enhancement of various export sectors that will compensate for the rapid erosion of income from oil export. Nevertheless, the performance of the stock indexes on the Damascus exchange, as well as the success of most of the economic measures the Syrian government promised to undertake are not dependent solely on Syria’s willingness to enact liberalization and develop its economy at a moderate pace. Rather, they also hinge on the diplomatic ties that evolve between Damascus and the Obama administration.

The direct American sanctions ordered by President Bush in May 2004 did not damage the Syrian economy seriously, but the mere fact that the US declared and led an economic war against Syria significantly lessened its attractiveness to foreign investors and companies. The fact that the Damascus exchange is opening only now, even though President Asad ordered its opening as far back as 2006, is one indicator that clearly illustrates this claim: from reports published in recent years in the world financial press it appears that concern over the US’s possible reaction prevented several international companies from supplying Syria with technical support services and helping it set up an electronic trading system. Similarly, there is a list of telecommunications companies, financial corporations, and most important of all, energy companies whose appetite for investing in Syria was
suppressed following the exertion of direct pressure on them by US Treasury officials.

The improved business environment resulting from the economic reforms did indeed enable Syria to increase the flow of direct foreign investments over the last three years by dozens of percent. But a breakdown of the sources of the investments indicates that most of them came from Turkey, Iran, and
other Gulf states, where the existing number of companies cannot provide Syria with all of its needs to rebuild the energy industry and develop other sectors. It is likely that Gulf states’ activities in Syria will decline in the near future due to the sharp fall in oil prices that is curtailing their scale of operations in foreign markets. Even Syrian exports, which in recent years enjoyed increased demand in the Gulf region given the economic upswing, are likely to be affected due to the decline in oil prices and the global recession. The recession is likewise expected to affect the state’s income from tourism as well as the amount of foreign currency sent by Syrian citizens working in the Gulf states.

One of the factors likely to compensate to a certain extent for the expected decline in demand for Syrian exports is the recent warming of Syria’s ties with the European Union (EU). In 2004, the parties initialed a trade agreement, but its implementation was frozen after the assassination of Rafiq al-Hariri in February 2005. The thawing of ties with France paved the way to renewed acceleration of the economic negotiations between the parties, and on December 14, 2008 the parties initialed an updated version of the agreement. The removal of European quotas for a number of Syrian agricultural products – whose yields were hurt by the drought afflicting the country – may help slightly to ease the pressure incurred from the economic crisis and the decline in oil production.

Syria can increase the competitiveness of its products in other potential markets as well if it succeeds in becoming a member of the World Trade Organization (WTO). In 2001, Syria’s request to become a member of the WTO was rejected, in part due to the US’s vigorous efforts to block acceptance. The lifting of American objections to Syria’s becoming a member of the WTO is just one carrot among many that the US can extend to Syria’s economy.

Syria launches stock exchange
By Raed Rafei,  March 11, 2009, LA Times Blog

Trading on the DSE will be indirectly supervised by the government, which is shifting from decades of socialist policies toward a more market-oriented system.

Reporting from Beirut — Syria launched its first stock exchange in decades Tuesday in a bid to upgrade its financial system and attract much-needed foreign investment to its growing economy.

The country, which is seeking to privatize its once heavily state-owned economy and draw new investments into its ailing public sector, is shifting from decades of socialist policies toward a more market-oriented system.

The Damascus Securities Exchange, or DSE, which will be indirectly supervised by the government, began with only six listed companies, including banking, publishing and transport firms, and will be open just two days a week.

“The bourse will constitute an important turning point in the Syrian economy,” Finance Minister Mohammed Husayn said, according to the official Syrian news agency.

About 20 companies are expected to be listed by the end of the year, officials said. Four brokerage companies have been licensed to operate.

Tuesday’s inauguration comes after three weeks of trial trading.

“The government is opening a channel for equity financing which did not exist before,” Nabil Sukkar, a former World Bank senior economist, said in a telephone interview from Damascus. “We want to join the rest of the world.”

But trading at the stock market will be tightly controlled in a first phase to keep speculation in check, officials said. Daily fluctuations in share prices will be limited to 2%. Investors won’t be allowed to buy and resell on the same day, according to the bylaws regulating the market.

“We want the [exchange] to function as an investment market rather than a speculation market, as we aim to attract long-term investment that will contribute to the growth of the economy,” executive director Mohammed Jlelati recently told the Syria Report, a business publication.

Foreign direct investment in Syria totaled $885 million in 2007, almost twice that of 2006, according to a World Bank report issued last year. But the figure represents a fraction of the Syrian economy and is minuscule compared with countries that benefit more from the influx of capital from oil-rich Persian Gulf states.

MEED Mar 13, 2009 Syria’s largest mobile telecoms company, Syriatel, is to list on the Damascus stock exchange. It is owned by Rami Makhlouf who is named as a sanctioned person by the US treasury.

Syrian Exchange Opens as Banque Bemo Is the Only Share to Trade
2009-03-11, By Nadim Issa

March 11 (Bloomberg) — Banque Bemo Saudi Fransi SA was the only share traded on the Syrian stock exchange’s first day of operating yesterday, rising 15 percent. “The bourse approved the listing of 3 new companies last Sunday and therefore investors did not know that the number of companies that will be listed rose from three on March 5 to six on March 8,” Hakam Tarabein, senior financial analyst at the Damascus-based brokerage company Pioneers for Financial Investments-Syria, said today by phone from Damascus.

Trading sessions will initially be held twice a week, Mondays and Thursdays before moving to a Sunday to Thursday schedule, according to the Web site of the Damascus Securities Exchange. Foreign investors will be required to maintain their holdings with a custodian, the exchange said on its Web site.

Banque Bemo climbed to 1,050 Syrian pounds ($22.5), yesterday’s trading statement said. United Group, Bank of Syria & Overseas and Bank Audi Syria SA are also listed on the exchanges so-called main market. Arab Bank – Syria and Al Ahlia Co. for Transport are listed on the so-called growth market.

Comments (5)

norman said:

Shouldn’t Syria have more companies listed and more diversified ones , not just banks.

probably this the right time to start a brokering bussiness , as opening an independent brokerage firm.

Syrians investing in the world markets will have a real chance of building wealth which has been out of their reach , the steep decline in the world stock markets might be the best chance for the Syrians to jump in and ride the tide up , as expected with the recovery.

God might be making up for the last 10 years that Syria was under sanctions .

March 15th, 2009, 2:45 am


LeoLeoni said:

This is definitely a positive step for Syria to move forward despite the hardships the country is suffering locally and globally. It is about time the project was initiated despite the global financial crisis. It would have definitely made more impact if more companies were listed but it is understandable that many companies are being conservative and would rather wait until the end of the year before they make such a major decision and list themselves.

I personally don’t understand the pessimism some folks might have regarding the initiation of the stock market. At one point they claim that we have very late in implementing the market and in another point they claim that if implemented, it will result in utter failure. I don’t agree that the companies will not grow because of a lack of purchasing power. In fact, the Syrian population is in dire need for an alternative investment class different from the over-burdened investments in the real-estate sector. Real estate and foreign stock/bond markets were the only option available (some would also mention “under the bed-mattress”) and now a new opportunity is in place.

The stock market will have many positive effects in the economy.
1. It will create new jobs and new sectors such as financial analysts, brokers, traders, investment bankers, auditors, public relations, accountants, and lawyers with a corporate background.
2. There will be more transparency in the business environment. Financial statements will now be public for all companies listed. The public will have an idea on how businesses are operating. More media coverage brings more attention to the business which in turn puts more pressure on companies to be responsible. (Yes I know that fraud and corruption will still exist and that it’s a difficult task to wipe them overnight.)
3. New business concepts will have to be developed. Companies will have added responsibilities which will require them to evolve their finance, accounting, marketing, management, and all other divisions to meet the expectations. Those family businesses that had a tight-fist approach in running their businesses will come to understand that they will now have to delegate their duties in order to meet the demands of the shareholders. New visions will be created.

I wish the folks who are running it the best of luck.

March 15th, 2009, 12:28 pm


norman said:

Turkey is trying to have a Middle East market,

w w w . t u r k i s h w e e k l y . n e t

Turkey Starts Negotiations with Azerbaijan, Syria and China to Carry on Trade in Local Currencies

ANKARA – Turkey was eager to use local currencies in trade with neighboring countries, Turkish State Minister for foreign trade has said.

Kursad Tuzmen said Turkey would start negotiations with Azerbaijan and Syria, as well as China, to carry on trade in local currencies.

“We have been working to boost trade with neighboring countries since 2000 and we have come a long way,” Tuzmen said. “Now, we are working on a further integration with these countries. We believe that use of local currencies would surge our mutual trade with neighbors,” he said.

He said Turkish officials have been in talks with Russia and Iran for a while and talks advanced significantly.

“Trade in local currencies would be to the interests of all parties,” he said.

Tuzmen added that a Russian delegation would come to Turkey in April to discuss trade in ruble.

“We will hold final talks to operate the system properly. We plan to finalize works to launch trade in ruble as soon as possible,” he stated.

March 15th, 2009, 2:41 pm


SimoHurtta said:

There are over 220 countries that run a well established Stock Market worldwide, Syria is one of three that did not have one, left DPRK and Cuba.

Really? Extremely difficult to believe that. Maybe a credible link will save your face, Syrian Nationalist party. Has Somalia for example a well established Stock Market. Or Naru, Tuvalu etc.

If you write propaganda the first lesson is to lie as little as possible. With an absurdly oversized exaggeration you loose at once your credibility.

I spent few hours refreshing my knowledge today about Syrian industries and checked out over 164 of them. Just on product evaluation, not having pricing, could not find more than 2 companies that would have any potential for growth outside Syria.

As an former industry analyst I must say that analysing 164 companies and industries in a couple of hours is an asthonishing achievement. Normally a decent analysis of one company takes days or weeks. Analysing an industry (several companies in the same field) takes months.

By the way Syrian Nationalist party do you know what where Nokia’s main products in the 70’s? Well they were rubber boots, toilet paper and cables. Nokia established with an other company (Salora) the mobile telephone business. 😀


Interesting news

Turkey to use lira in trade with Iran

Tuzmen said Turkey has completed the necessary structural work to begin trade with Iran and Russia in its local currency, Press TV correspondent in Ankara Mehdi Gholizadeh reported.

He stressed that the plan will considerably increase Ankara’s trade with Tehran and Moscow and that it will solve the problems caused by trade in foreign currencies.

Turkey eyes to use local currencies in trade with neighbors

Kursad Tuzmen said Turkey would start negotiations with Azerbaijan and Syria, as well as China, to carry on trade in local currencies.

“We have been working to boost trade with neighboring countries since 2000 and we have come a long way,” Tuzmen said. “Now, we are working on a further integration with these countries. We believe that use of local currencies would surge our mutual trade with neighbors,” he said.

Ankara unlikely mediator between Washington, Tehran

No wonder that Obama has planed to make soon a trip to Turkey.

March 15th, 2009, 3:11 pm


Joshua said:

Thanks for the info on Turkey moving away from dollar denominated trade with its neighbors and distant trading partners, such as China.

Also, glad to hear that Syria is ahead of Somalia. It did seem a little odd. Thanks for setting us straight, Simo.

March 15th, 2009, 5:15 pm


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