The Palestinian Exchange was influenced by the international economic events, which reflected on the investment of capital gains and the distribution of profits among companies listed in the Palestine Exchange. This report outlines the different factors that affected the Exchange and its response to them.

Hasnaa Al Rantisy – Palestine Economy Portal      

Translated by Tamara Barakat

Despite the fact that the Palestinian economy is somewhat small and isolated from the international economy, and that it rarely affects it or gets affected by it, 2015 was brimming with economic surprises that influenced the Palestinian Stock Exchange sometimes positively, and other times negatively.

Effect of Increase in Value of Dollar

The increase in the value of the dollar positively affected some of the companies, while others were negatively influenced. Services companies, for example, sell their services in shekels and pay their suppliers in dollars and Jordanian Dinars, and so, they were negatively affected. The number of positively affected companies is small.

Effect of Decrease in Petroleum Prices

Mohammad Khreim, the Head of the PR and Investment Awareness Department at the Palestine Exchange, said, “It is true that we are not a producing or exporting country, but a consuming one. Petrol could be one of the factors of production for some of the companies listed as part of the industrial sector in the Exchange. Consequently, the drop in petroleum prices had a positive effect on these companies, by decreasing their operational expenses or production costs.”

The Biggest Obstacle

The political conditions formed the biggest obstacle in the face of the companies listed in the Palestine Exchange. The effect of these conditions was negative and it is still ongoing, especially during the absence of any political horizon.

Khreim explained, “Even though the circulation increased after October, during the outburst of protests that is still ongoing, the lack of a political horizon affects investments. Investors will think about the high degree of risk that will be carried by their investments due to the political conditions.”

Merges

The Palestine Monetary Fund’s decision to allow a bank’s capital to reach 75 million JDs prompted some banks to merge with others. For example, the Palestine Commercial Bank mentioned that it will probably merge with other banks, and two weeks ago, the Islamic Arab Bank merged with the Bank of Palestine. Moreover, the National Bank acquisitioned the Arab Jordan Investment Bank’s branch, which increased its net worth.

3G Services: a Very Strong Factor

Some of the services related to the telecommunication sector, such as the 3G, played a positive role, and formed an extra advantage that raised the prices of the Wataniya Mobile shares.

Khreim said, “The 3G will have a positive influence that will become apparent in the first quarter of 2016 due to the new services that the Palestinian telecommunication companies will offer to their customers.”

Moreover, the tax that was imposed on the Wataniya Mobile’s license, but which was frozen by the Palestinian Cabinet, greatly influenced the company’s shares and increased them.

Internally, in the Palestine Exchange, Khreim explained that a new electronic system was created for the disclosure of the listed and intermediary companies. The work on this system started in 2015, and it forms a positive step and a development that can positively influence the companies registered in the Palestine Exchange.

We were Fortunate

Commenting on the aforementioned, the economic expert, Dr. Nasser Abdel Karim, said that the stock exchange declined worldwide during the past two months because of the political and economic crises, while the Palestine Exchange remained unaffected. He thinks that we were lucky that we did not experience the same degree of decline, and so we can consider ourselves to be far from influence of global fluctuations.

Dr. Abdel Karim explained that Palestinians are generally affected by the factors on the ground, and they are affected by Israel more than any other factor.