The Palestine Securities Exchange (PSE) looks set to receive a boost to its trading volumes in 2010. Two companies have already listed and there is a pipeline of six initial public offering (IPOs) expected to list by the year’s end.
The biggest of these will be Wataniya Mobile’s offer of 30 per cent of its shares – equivalent to $170m – in an IPO at the end of June.
Estimated at $70m, The Arab Palestinian Investment Company’s (APIC) IPO, will be the second largest.
The final IPO will be that of the PSE itself which, is planning to float between 20 to 30 per cent by the year’s end.
The PSE has further been working hard to drum up interest in the exchange from foreigners, particularly the Palestinian diaspora, through a series of roadshows. It hopes to replicate Israel’s success in getting Jews from abroad to support its markets.
These efforts are proving relatively successful. In March this year, it held an investor roadshow in London which saw it sign three new institutional investors who are in the process of setting up specialised Mena-based funds for their clients.
Like all exchanges around the world, the PSE has suffered at the hands of the financial crisis. Its trading volumes fell 30 per cent in 2009, while the value of its shares fell 58 per cent.
It seems to be on an upward trajectory of growth now – the PSE has added 1.1 per cent this year compared to the MSCI Emerging Markets Index, which has lost 4.9 per cent.
The listings planned for this year will certainly help in deepening the PSE and as a frontier market, it offers good investment opportunities.
In spite of ongoing conflict and instability in the region, the exchange had a turnover of $500m in 2009 and its market capitalisation currently stands at $2.5bn.
It was ranked 33 among international stock exchanges and second in the region in terms of investor protection.
Negative perceptions abound. Palestine gets more media coverage than anywhere else in the world, the majority of which is negative, and deters potential investors. The PSE’s greatest challenge will be in convincing investors that despite the obstacles facing businesses operating in the West Bank, the exchange has strong growth prospects and offers attractive returns on investment.