By: Dr. Adli Kandah
If the rise of the Amman Stock Exchange index in 2025 is read through traditional analytical tools, it may appear as a strong recovery story in a small market. However, when deconstructed using the analytical frameworks employed by leading global research centers, it reveals a comprehensive repricing of risk and assets, driven by a gradual shift in fundamentals rather than a transient liquidity shock.
According to a Multi-Factor Analysis approach, the more than 45% increase in the general index—from around 2,488 points to approximately 3,611 points—can be explained by the convergence of three main trajectories: an improvement in profitability, a decline in the risk premium, and an expansion of the liquidity base. When these factors intersect in an emerging market with limited capitalization, they produce what financial literature describes as a “Market Rediscovery Phase.”
From the perspective of liquidity and market depth analysis, the jump in average daily trading value from about JOD 4 million in 2024 to more than JOD 11 million in the second half of 2025—an increase of nearly 175%—does not merely reflect speculative activity. Rather, it signals a transition from “fragile liquidity” to “functional liquidity,” where trading volumes are capable of absorbing news without sharp volatility. This pattern is precisely what global advisory firms observe at the onset of structural transformations in smaller markets.
From the standpoint of sovereign and sectoral risk repricing, monetary and financial stability played a key role in reducing the implicit discount rate used in equity valuation. With exchange rate stability, banking sector capital adequacy ratios exceeding 18%, and diminished concerns over financial stability, domestic investors began repricing equities at higher price-to-earnings multiples. These multiples, however, remain below those of major emerging markets, keeping the “value” component strongly present.
Sectoral breadth analysis shows that the rise in share prices of more than 104 listed companies—over half of the market—constitutes a fundamental signal that the rally was not confined to a narrow group of heavyweight stocks. Historically, such movements are classified as healthy bull waves, as they reduce the risk of sharp reversals caused by concentration. The fact that the index of the top twenty companies rose by more than 47%, compared with an increase of over 45% in the general index, confirms a relative balance between market leaders and the broader market.
As for foreign investment, smart money flow analysis indicates that it was not the initial driver of the rally, but rather entered at a later stage once domestic signals became clearer. Foreign inflows, concentrated in leading financial and industrial stocks, exhibited a long-term institutional character, similar to the strategies of emerging market funds seeking markets with high real returns and controlled macro risks. This pattern differs fundamentally from hot money flows and acts as a stabilizing force rather than a source of volatility.
From a macroeconomic perspective, the performance of the Amman Stock Exchange can be categorized within what research centers term “positive decoupling,” whereby a financial market outperforms regional peers despite a turbulent geopolitical environment. Such decoupling typically occurs only when a market has already internalized risks and begun to reflect future expectations rather than merely mirroring present conditions.
Looking ahead to 2026, although only four days of the year have passed, globally applied forecasting tools—particularly scenario analysis—suggest three possible paths. The base-case scenario points to moderate growth of between 8% and 12% in the general index, supported by continued operating profits, stable cash dividends, and an average daily trading value of no less than JOD 9–10 million. The optimistic scenario assumes an acceleration in high-quality listings or an expansion in institutional investment, potentially lifting growth to around 15%. The cautious scenario links slower performance to external factors, without pushing the market back to pre-2025 levels.
By global analytical standards, the challenge in 2026 will not be the achievement of new numerical highs, but rather the transition from a “rising market” to a “relatively mature market,” where quality is measured by the ability to sustain liquidity, broaden the investor base, enhance governance, and link corporate financial performance to real economic growth. Only at this point can it be said that the Amman Stock Exchange has definitively exited the recovery cycle and entered a long-term structural trajectory—the very transformation emerging markets seek when they aspire to be treated as an investment story rather than a temporary case.
