Given the oil boom, you’d expect the top-performing stockmarket in the Arab world this year to be in the Gulf. In fact, it’s in Palestine.
Since the year began, the Al-Quds index of the Palestinian Securities Exchange, based in the West Bank’s Nablus, has risen by 40%. The next best market has been Qatar, which has risen by 35%, says Tobias Buck in the FT.
The upswing reflects the gradual stabilisation of the economy in the Palestinian West bank, which has remained largely unaffected by the instability in the Gaza strip. Matters have been helped by the fact that Western governments have resumed financial support to the Palestinians, with $7.7bn over three years pledged last December.
Nonetheless, it will be some time before mainstream investors arrive in significant numbers. The political backdrop is crucial – a boom in 2005 reversed when Hamas’s election victory dented sentiment, although the downturn was exacerbated by locals who had fallen prey to irrational exuberance selling out.
Meanwhile, although the lack of foreign ownership restrictions is good news, the tiny market is hampered by slack corporate governance and scant research on listed firms, says Buck, while insider selling remains a problem.