The Extent of Rwsponse of ASE to the War Probabilities on Iraq (Research Note)

Osama Azmi Salam


Through this study, financial data from Amman Stock Exchange (ASE) was analyzed in order to produce an assessment of the economic consequences of a prospective war in Iraq. The new feature of this study analysis derives from the existence of a market for “Saddam Securities,” a new future traded on an online betting exchange that pays only if Saddam Hussein is ousted. A variety of tests conducted by other researchers in an another study suggest that this future’s price provides a reasonable estimate of the probability of war. Large effect was found in ASE whereby war expectations lowered the value of Jordanian equity by 3% for a 10% rise in probability of war. This effect is highly noted in the Services Sector where equity is lowered by 10% for a 10% rise in probability of war.


Saddam Securities, Saddameter, ASE General Index, ASE Services Sector Index

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