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.
Syria operated an informal stock market that traded in assets until the economy was nationalized in the 1950s. Since President Bashar Assad took power in 2000, Syrian authorities have opened the door to the establishment of private banks and have tried to loosen investment laws.
Earlier this year, a senior official told reporters that the country was considering giving foreign investors a chance to buy controlling stakes in financial sector companies.
Although the government has been weighing the establishment of a stock market for years, the inauguration was repeatedly delayed while officials hammered out regulations for traders and brokerages, tested electronic equipment and trained staff.
“It is better to be cautious and conservative in the beginning,” Sukkar said, “because there is no culture of trading at a stock exchange.”
Rafei is a special correspondent.