Beirut: Arab governments should open up their stock markets and let them become public companies to give them greater flexibility to attract foreign investment, the chief executive of Jordan's bourse said.
Many Arab exchanges are managed by governments which appoint the bourse chief and set legislation. Analysts and brokers say that government ownership hinders transparency and competitiveness and reduces the quality of services.
Many governments also restrict foreign investment with higher taxes on investments and profit and limit foreign shareholdings in individual companies. "Many Arab markets [were] formed by central banks or governments... The global trend [is] heading towards transforming the exchanges to public companies," Jalil Tarif said in an interview on Tuesday.
Flexibility
"The purpose is to give the bourses more flexibility in taking decisions. [Then] decisions will be based on profit and loss in a framework governed by legislation and supervision to ensure there will not be conflict of interest."
"Finding an environment of more freedom in markets and flexibility definitely encourages investment and attracts foreign investors to deal on the exchange," he said.
While many in the region acknowledge the need to reform markets, only few openly raise the issue of government control. Saudi Arabia, the biggest Arab bourse, is a closed market at the government's direction.