Palestine Securities Exchange Leads All Middle Eastern Markets In 2005

Middle Eastern stock markets have achieved a year of substantial gains led by the Palestine Securities Exchange (PSE). While the stock exchanges in Abu Dhabi, Egypt, Jordan and Saudi Arabia were showing impressive year to date gains of more than

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Middle Eastern stock markets have achieved a year of substantial gains led by the Palestine Securities Exchange (PSE).

While the stock exchanges in Abu Dhabi, Egypt, Jordan and Saudi Arabia were showing impressive year-to-date gains of more than 100% by Nov. 30, PSE posted a gain of 366%. The Middle Eastern markets have been riding on an unprecedented period of economic expansion, resulting from a combination of high oil price levels, repatriation of capital, and low interest rates.

In November, the PSE’s Al-Quds Index increased 37.07%, to close the month at 1295.08. At the end of 2004, the index was more than 1,000 points lower at 277.56. November trading volume totaled 48 million shares, the second highest this year, bringing the year-to-date volume total to 330 million shares.

The PSE’s market capitalization of approximately $5.0 billion means it is still a small player compared with its neighbors — the Gulf Cooperation Council (GCC) markets, for example, have a combined market cap of more than $1 trillion. However, only five years ago, the GCC market cap was at $120 billion, which points to the potential for the PSE’s future growth, according to David Grayson, managing director of global brokerage firm Auerbach Grayson & Company, New York.

“We are already seeing our institutional clients in the U.S. execute orders on the PSE, and this trend will combine with local and regional activity to give further impetus to the PSE’s growth,” according to Grayson. The U.S. orders are executed on the PSE via Auerbach Grayson’s local partner, Atlas Investment Group of Amman, Jordan. The exchange has seven locally established member firms.

The PSE’s performance has been helped by the formation of a stronger financial markets regulatory framework in Palestine, including the Capital Market Authority (CMA) which supervises non-bank financial institutions, including the PSE.

The contributions made to the economy by Palestine’s leading corporations, particularly the PADICO conglomerate and the PALTEL telecom company, have also benefited the exchange. And significantly, a new mutual fund called MENA, launched by Arab Bank and administered by the Atlas Investment Group, has selected the PSE among the exchanges that qualify for its investments.

Summing up the prospects for the exchange, PSE General Manager Hassan Yassin, commented: “Taking into account corporate growth expectations over the coming years, the relative political stability, the formation of the CMA, and the significant improvement in the disclosure environment, we believe the PSE will continue to exhibit strong upside potential and contribute positively to the future growth of Palestine’s economy.”

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