FEAS Yearbook FEAS Yearbook 2009 | Page 118

FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT APRIL 2009 PALESTINE SECURITIES EXCHANGE ECONOMIC AND POLITICAL DEVELOPMENTS Political Developments During the year 2007, the Palestinian Territory witnessed dramatic changes and developments, from one side the Palestinian political map changed radically at the results of 14 June events that led to the separation between West Bank and Gaza strip, on the other the Palestinian economy keeps closed to its average growth rate this year which did not exceed 2% according to official sources. Taking into account the financial blockade was eased, followed by an international conference in Ana Police – USA to activate the peace process in the Middle East, and later the donor conference held in Paris, aiming to provide the required financial support from the International community, given these evidence it is expected that the Palestinian Economy to realize better performance in the coming months, and this situation will be directly impacted by any further complications in the Palestinian territory. Economic Developments By the end of the year 2007, the number of the Palestinians exceeded ten million people; four million of them live in the Gaza Strip and the West Bank including Jerusalem. From an economical prospective, statistics at the end of the year 2007 shows that the revenues of the Palestinian National Authority during 2007 is estimated to reach 600 million US dollars in comparison to 1,290 million dollars during 2005 with a drop of 55%. The main reason behind this decline is the current situation in PT (decline in collecting local revenues), and also due to Israeli government measures which resulted in halting the transference of the Palestinian taxes revenues on a monthly base. The donations received by the Palestinian Authority during the first three quarters of 2007 reached 668,748,936 dollars, tout of 867,013,066 dollars committed for the whole year, that is, nearly of the amount donated during 2006, taking into account the results of the Donor conference hosted by France in December 2007 to support the Palestinian government Plan for the next three years where a 7 Billion US $ are committed by Donors to finance government plans for this period. ratio2 increased in the Palestinian Territory from 4.8 to 5.6 between the 3rd quarter 2000 and 3rd quarter 2007 (the change rate is 16.7%) which negatively impacted the level and standards of living and poverty levels in Palestine. Impact of the economical situation on the PSE Despite the political and economical deteriorations, the Palestine Securities Exchange (PSE) stands on a solid ground, as it on both directions; improving the performance of the market, and improving the investment environment in securities market, which enables PSE to achieve outstanding results in the year 2007 although they were less than 2005. This goes in line with the case of the markets in the region as most of the Arab exchanges witnessed deep correction movement following the dramatic rises of stock prices in 2005 that was not anticipated by most observers. In 2007, the PSE held 248 trading sessions with approximately 160 thousand transactions were executed with a value that goes around US$ 8 millions. Despite the drop of Al-Quds Index at a percentage of 15.00% compared with 2006, all indicators show that at any positive development in the political situation in Palestine will be reflected immediately at the economical circumstances and the PSE.* The preliminary estimates of the GDP at constant prices for the third quarter 2007 shows an increase by 0.9% compared with the second quarter 2007, and showed an increase of 1.2% compared to the third quarter of the year 2006, this performance still below its levels in previous years, as its declined by 10.3% compared to the third quarter of the year 2005. According to ILO standards; The percentage of persons who don't work, but seeking job increased from 19.2% in the 2nd quarter 2007 to 23.2% in the 3rd quarter 2007, compared with 10.0% in the 3rd quarter 2000 (before the beginning of Al-Aqsa Intifada). On the other side economic dependency * Information provided by the Palestinian Stock Exchange Key Information Contacts Palestine Capital Market Authority: www.cma.gov.ps Ministry of Finance: www.mof.gov.ps Ministry of National Economy: www.met.gov.ps Palestinian Investment Promotion Agency: www.pipa.gov.ps Palestine Monetary Authority: www.pma-palestine.org Palestinian Central Bureau of Statistics: www.pcbs.org.ps Palestinian Economic Council for Development and Reconstruction: www.pecdar.org Palestine Institute for Financial & Banking Studies: www.pifbs.com Palestine Media Center: www.palestine-pmc.com Custodian Bank - HSBC Bank Middle East: www.middleeast.hsbc.com Settlement Bank - Arab Bank Palestine: www.arabbank.ps ECONOMIC RATIOS GROWTH OF INVESTMENT AND GDP (%) Palestine Lower-middle-income group GDI Trade Domestic savings Investment Indebtedness PAGE 116 10 0 -10 -20 -30 -40 -50 -60 -70 -80 97 GDP 98 99 00 01 02 03 * World Bank reports