Jordan’s stock market gains 31% in a year as borrowing costs fall

Jordan’s stock market has climbed sharply since December 2024, rising from 81.5 to 140 in August 2026. The rebound reverses most of July’s pullback and leaves the local-currency index just below June’s record. Cheaper money is likely helping sustain demand for shares, but the scale of the advance suggests investors are also anticipating stronger earnings or becoming more comfortable taking risks.

The monetary backdrop has become more supportive. During 2025, the policy rate fell from 6.25% to 5.50%, where it remained through July 2026. Lower rates typically lift equity valuations by reducing the return investors demand to hold shares and making future profits more valuable today. They can also make interest-bearing savings less attractive relative to stocks. Jordan’s dollar peg limits monetary independence: room for further easing depends heavily on US interest rates and maintaining confidence in dinar assets.

Yet a pause in policy cuts does not mean their effects have stopped spreading. Lending rates have fallen for eight consecutive months, reaching 7.43% at the latest reading. That continuing decline points to earlier easing still working through bank funding costs and loan pricing. Existing fixed-rate borrowers may benefit only when they refinance, while businesses taking new loans or using floating-rate credit could feel relief sooner.

This gives the rally a source of support even without another central-bank move. Lower financing costs would tend to help property developers, construction companies and businesses borrowing to fund inventories. Households whose loan payments fall could gain spending room, supporting retailers and services. But cheaper loans are not the same as easier access: smaller firms may still face collateral requirements and cautious bank lending.

For listed banks, the effect is mixed. Lower loan yields can squeeze margins if deposit costs adjust more slowly. Stronger credit demand and fewer troubled borrowers could offset that pressure. For Jordan’s phosphate and potash producers, international prices and export demand are likely to matter more than modest changes in domestic financing costs. A market rally therefore need not imply that every sector is enjoying the same improvement.

Cheaper money looks like an important support, rather than a sufficient explanation for the whole advance. Shares respond to anticipated cuts before borrowers receive them, so some benefits may already be priced in. Regional tensions also matter: reduced anxiety would tend to support tourism, investment and investor appetite, while renewed disruption could overwhelm financing relief.

The next test is whether lower borrowing costs produce stronger loan growth, investment and company earnings. Bank margins, repayment performance, exporters’ results and whether gains extend across more companies will help distinguish improving business conditions from investor enthusiasm. Without stronger profits, further advances would increasingly depend on investors paying more for the same earnings—a less durable foundation once rate cuts pause.

Analysis by MENACodex. The reasons and effects discussed are our reading; every figure traces to official data.