Share trading on Palestine Securities Exchange up 34%

By Global Investment House

The PSE saw Al Quds Index shedding 12.8% in 2007, compared to losses of 46.4% in 2006.

Losses continued to accumulate during the first eight months of the year, with the index reaching a low of 408.10 points in late August, as many investors divested their portfolios amid uncertainties of future market trend.

However, the index recuperated toward the end of the year to close at 527.26 points.

Market breadth was negative, as decliners outnumbered advancers with a ratio of 5.8:1, indicating a widely-spread downward trend.

There was a large increase in the total number of traded shares during the year, with 299.4 million shares exchanging hands, up by 34.5% from the 2006 level of 222.7 million shares. However, the value of traded shares declined by 23.8%, reaching JD576.4m compared to JD756.4m in 2006.

Indices' Performance

There was a large increase in the total number of traded shares during the year, with 299.4 million shares exchanging hands, up by 34.5% from the 2006 level of 222.7 million shares. However, the value of traded shares declined by 23.8%, reaching JD576.4m compared to JD756.4m in 2006.

This was due to the combined effect of an overall decline in share prices along with active trading on the newly listed shares with relatively low share prices in absolute term. The PSE started executing online trading transactions in April and signed a number of agreements with brokerage firms to provide online stock trading services.

From April 17 to year-end the total number of shares traded online reached 41.08 million, with total value of JD84.36m, representing around 20% of the total market traded shares during the same period.
Trading Activity


The PSE's total market capitalisation declined by 9.3% to stand at JD1.75bn at the end of the year, representing around 58.9% of estimated real GDP for 2007. The services sector had the largest weight representing 41.3% of total market capitalisation at the end of 2007.

The investment sector came next with a 29.2% weight, followed by the banking sector with 17.4%. The industrial and insurance sectors are smaller in size, comprising 8.4% and 3.7% respectively of total market capitalisation at the end of the year. However, the market is dominated by three companies (Palestine Telecommunication Company, Palestine Development and Investment Company and Bank of Palestine), which comprise more than 65% of total market capitalisation combined.

At the beginning of 2007, the PSE started to publish the indices for each of the five economic sectors represented in the market, in order to enhance the representation of the market performance. The constituents of Al Quds index were also adjusted at the beginning of 2007 to cover 12 companies by adding Golden Wheat Mills and National Insurance.

By the end of the year, the number of listed companies grew to 35, from a total of 33 companies at the end of 2006. Three new companies entered the market, Al Rafah Microfinance Bank , the Palestinian Distribution & Logistics Services and Union Construction & Investment, while Palestine International Bank was de-listed from the PSE in June, as it has been suspended from trading since October 2005, due to irregular disclosure of its financial results.

According to the nine months financial statements ending on September 30, 2007, most listed companies were able to overcome the negative effects of the deteriorating political situation, with the market's overall earnings remaining relatively stable compared to the same period of 2006, thus bringing the PSE's 12-month trailing P/E to 14.01x at the end of 2007, down from 17.00x at 2006 year-end.