Despite the economic decline in the Palestinian Authority, the Palestine Stock Exchange (PSE) in Nablus still functions. It has even held three IPOs so far in 2004.
"The PSE continues to operate, even under the current circumstances," PSE CEO Dr. Hassan Yassin told "Globes", "Despite the deterioration and difficulties, neither the PSE nor its listed companies have collapsed."
Founded in 19997, the PSE now has 26 listed companies, with an aggregate estimated value of $760 million. Most trading is concentrated in three companies: Gaza-based Palestine Electric Company (PSE:PEC), which recently held a $60 million IPO; PalTel Palestine Telecommunications Co. - Itisalat (PSE:PALTEL); and Palestine Economic Development and Investment Co. (PSE:PEDICO), which has a market cap of $160 million.
Since trading on the PSE is electronic, it is rarely affected by the security situation and difficulties in movement. No trading days have been cancelled since the beginning of 2003; the PSE was closed for three months in 2002, the most intensive year for IDF operations in the West Bank. There are five trading days a week.
Yassin says foreign investors from Arab states have abandoned the PSE, and virtually all investment is now domestic, carried out through six brokers based in the territories.
The PSE stock index is called the Alquds Index. From its peak of 292 points in April 2000, before the outbreak of the intifada the index was at 191 points today. The index nadir was 145 points, during Operation Defensive Shield in April 2002.
In addition to the security situation, which prevents any real development of the stock market, the PSE suffers from the lack of a Palestinian securities law, which the Palestinian National Council has not yet passed. Yassin believes that 20-25 Palestinian companies are suitable candidates for IPOs, and the PSE is negotiating with some of them.
"We had hoped to create a developed and active stock market, but the political situation and its economic repercussions caused a massive retreat," says Yassin. "When we pass through Israeli roadblocks and the soldiers ask us where we work and we reply, 'The Palestine Stock Exchange', the Israelis don't believe that such an institution exists in the territories. Nevertheless, despite everything, we've been able to continue to operate."
Published by Globes [online] - www.globes.co.il - on August 26, 2004