As Syria stock exchange slumps, investors hold shares and dream of rally

DAMASCUS, Syria (AFP) — Mohammed al-Harki is one of the few investors who bother to show up anymore at the Damascus stock exchange, waiting for a rally in share prices that have withered after nearly five years of war.

The 52-year-old bought several million Syrian pounds in shares when the exchange opened in March 2009, just two years before the outbreak of the conflict, hoping to hit the jackpot.

But the opposite has happened.

“Before, I came here to add up my gains. Now, my losses are significant,” he said despondently.

“But I’m not going to sell my shares now, because I risk losing even more.”

“The exchange is my passion, but sometimes I come here just to sleep,” he said.

The figures tell the story of the stock exchange’s decline.

In 2011, some 17.7 million shares were traded, for a value of 7.8 billion Syrian pounds. By last year, turnover had risen to 25 million shares, but their value was more than halved to just 3.3 billion pounds.

At the same time, market capitalization has risen sharply, from 82 billion pounds to 125 billion in 2014. But that is illusory because of high inflation and a plunge in the value of the currency.

In the past four years, the pound has gone from 60 to the dollar to 250.

The trading floor is a comfortable room with 160 black leather seats facing an electronic board showing transactions.

But apart from a handful of employees, Harki and fellow investor Amer Toumeh are usually the only ones there for the Monday-Thursday trading week.

‘Everyone else has gone’

 

“I’ve never missed a single session, even when shells were raining down on the city,” Toumeh says.

“Before the war, the room would be full of investors and brokers, but nowadays it’s just us two and the employees. Everyone else has gone.”

The exchange was part of an “economic liberalization” plan implemented after President Bashar al-Assad’s ruling Baath party decided that year to adopt a “social market” economy.

Initially, nine companies were listed, with the number growing to 24, including banks and insurance firms.

But only six are actively traded.

Yet despite the market’s dwindling fortunes, director Maamoun Hamdan says it is a “victory” that it “has never closed, despite the war.”

“For many years, Syrian economists dreamed of having a stock exchange,” he told AFP.

“Now we’re waiting for the end of the conflict to relaunch our economic program.”

But economic expert Jihad Yazigi said the stock exchange is little more than a facade for the regime to “present things as though everything is going well and the economy is progressing.”

“The exchange gives a sense of modernity and allows the integration of the economy into international markets,” he told AFP.

“So it’s very important for the government to maintain this institution, which it considers to be part of its legitimacy.”

Despite his losses, Harki is determined to hang on to his shares until they bounce, and is even continuing to invest.

“I might be considered an old fool, because I’m buying shares five years into a war, and I’m holding on to what I already have,” he said.

“I’m even willing to buy more” if new companies are listed, he added.

“Prices are low, so one must take advantage of the situation. Tomorrow, when the war ends and prices go up, I’ll sell them.”

“This type of investment requires patience — it’s long-term,” he added.

Other investors seem to have adopted the same strategy.

Diaa Hijazi, director general of the Sham (Levant) insurance company, said: “They all want to hold on to their shares in the hope of selling them one day during the reconstruction phase.”

Despite the stagnation, the exchange’s director dreams of the day that new companies will list on the Damascus stock exchange.

“Today, they are mostly in the financial and insurance sector,” he explained.

“What we’re missing are companies in the property and service sector, which will grow when reconstruction starts.”