Palestine's stock exchange
Beat Ernie - Tue 29 Aug, 2006
...Since 1997, this index, which is part of the Al- Quds-Index in Nablus in the West Jordan and Palestine stock market, represents the events on the Palestinian markets. In 1996 the autonomous agency granted the founding of a stock exchange in order to acquire much- needed funds into the "country" and to gather capital...
Did you know that Palestine has its own stock exchange?
Even today, there is no such thing as a sovereign Palestinian state, although some countries have acknowledged it. The Palestinian autonomous agency as a government like institution is internationally regarded as a representative of the Palestinian people. However the territorial acknowledgement of a state is not given.
The Palestinian areas in West Jordan and Gaza are separated by Israeli land. After the forming of the state of Israel in 1948 the United Nations appointed the Gaza strip to the Palestinians.
The Gaza strip borders on the west to the Mediterranean Sea and to the South to Egypt. However, Egypt occupied the Gaza strip until 1967, and Jordanians occupied the areas of the West Jordan land. In the six-day war of 1967, Israel in turn occupied the two sections of "Palestinian land", and despite a few amendments in terms of troop reductions, Israel still remains put in these areas.
Lately the tension between Lebanon and Israel has again erupted into a full-scale war, making the cities in the Palestinian areas, such as Gaza, Ramallah, Dschenin or Nablus amongst the most dangerous places on earth, especially for westerners.
For most onlookers, the situation is incredibly complex, sometimes far from rational, and the news and media coverage is not always utterly unbiased.
But it’s not my aim to focus on Middle-East politics in today’s Profit Watch – it’s covered in enough depth elsewhere... and by reporters and commentators far better equipped to comment on the situation that I am from my "desk" perspective.
Palestine's stock exchange: A stock market and its index...
Instead, our attention will be on the "Palestine Stock Exchange Index", a truely unique index of all the international indices.
Since 1997, this index, which is part of the Al- Quds-Index in Nablus in the West Jordan and Palestine stock market, represents the events on the Palestinian markets. In 1996 the autonomous agency granted the founding of a stock exchange in order to acquire much- needed funds into the "country" and to gather capital.
On February 18, 1997 trading on the "Palestine Securities Exchange" (PSE) (www.p-s-e.com) began. Although Palestine was not a fully acknowledged state, the Palestinian areas from now on had their own index. Further information is downloadable at www.p-s-e.com free of charge.
Between 1997 and 2004 the Al-Quds-Index remained in a solid sideward trend. From the level of 170 points in August 2004 the index then quickly climbed new heights up to 1,300 points in December 2005. After little more than a year the exotic index had almost increased 8- fold!
According to information provided by the PSE the trading volume in 2005 was twice the size of the accumulated trading volume from 1997 to 2004, a staggering 2.1 bn USD! At the end of 2005 the market cap was 4.5 bn USD, above a couple of Eastern European stock exchanges featuring strong growths.
Within a record time the Palestinian stock exchange had made it onto the radar screen of investors. There was a new stock market star.
Despite the success, I know of no one who has ever invested on the Palestine stock exchange. Do you?
But it’s not all good news. 2006 has been terrible, with the index losing more than 50 percent of its market value since early January (and the record-highs of 2005). Currently the index trades around 600 points.
So if you were concerned that you’d missed out on the 2005 record highs, you can relax knowing you missed the 2006 performance as well!
Currently there are 31 different companies competing for international money on the Palestine Stock Exchange. From "A" as in Arab Concrete Products Ltd. to "V" as in The Vegetable Oil Industries Company Ltd. There are companies like Bank of Palestine (www.bankofpalestine.com), the National Carton Industry or the Palestine Investment&Development Company. Only a few of these companies have their own website, so the research is often a little tough, and in some cases only possible by visiting the company in person.
But if you’re like me, you wouldn’t be thinking about doing that what with the current political situation...
Whether the recent index correction is now an interesting opportunity for entering the market is too early to say. It’s probably just not worth the risk – it’s smarter to stay out of Palestine (both in person and with investments).
Regards,
Beat Erni
for The Daily Reckoning
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