Education campaigns help Palestine take its place on the world financial stage

By: Barraq Al-Nabulsi & Maher Al-Masri, General Director, Chairman of the Board of Directors, Palestine Capital Market Authority, Palestine Exchange Nov 2021

Palestine, along with about 100 countries, recently participated in the activities of World Investor Week 2021. The event, organised by The International Organisation of Securities Commissions (IOSCO) in partnership with the World Federation of Exchanges (WFE), was based on two themes: sustainable finance, and fraud and scam prevention. The activities started on Monday October 4th and lasted for a week, in a partnership between the Palestinian Capital Market Authority (PCMA) and The Palestine Exchange.

The activities included organising webinars featuring specialised speakers in the securities sector and financial institutions under various titles, including sustainable finance and its impact on development, sustainable development in the Palestinian securities exchange, among other topics. In addition, awareness-raising materials were published for investors in the securities sector, along with radio shows and written media reports.

Palestine's participation was important to help it keep pace with global achievements in the securities sector. The main goal was to highlight the objectives of the securities authorities, which is to prevent fraud and protect the rights of investors.

There is a growing interest in the need for sustainable development, through financing programmes and applications that take into account the current focus on financial technology and other sectors that affect the sustainability of development, including projects that have an impact on the climate, environment, resources, and alternative clean energy.

Sustainable development cannot be achieved without the application of clear rules to control compliance, with international standards regulating investment operations, including the rules of governance and the fight against the kind of fraud and deception that threaten to undermine confidence in the investment climate, repel investment, and disrupt economic development.

Remarkable growth

Stock-market financing in Palestine has seen remarkable growth in recent years. Seven public shareholding companies have raised capital through the stock market since the beginning of 2021. The market provides a fairly low-cost source of financing compared with banking institutions, as well as providing investors with a quick financing tool that they can trade through the stock market.

Accordingly, the market value of the Palestine Stock Exchange has increased 23 percent over the past year to US$4.2 billion.

Palestine took part in the global event because it wants to promote financial culture and spread investment awareness at the international and local levels. It also reflects the importance of international relations for the Palestinian securities sector in achieving its goals. Despite its small size compared with other regional and global markets, the Palestine Exchange has strived to earn its place among its peers by becoming a modern market that adheres to best international practices.

The Palestine Exchange and the Palestine Capital Market Authority (PCMA) is playing a leading role in the modernisation of Palestinian legislation related to improving the investment environment and the amendment of laws affecting investment, such as the new companies law recently signed by President Mahmoud Abbas that included articles aimed at stimulating circulation and strengthening the rules of governance.

Overcoming challenges 

The PCMA joined IOSCO in 2014, and has participated in World Investor Week activities since 2017 (with the exception of 2020). Despite enormous challenges presented by the pandemic, global economic fluctuations, and the domestic political situation, it is expected that Palestine’s GDP will increase 13 percent in 2021, according to the Palestinian Central Bureau of Statistics. Per capital share value will increase 10.4 percent and total investment value will expand by 62.1 percent from 2020.

These are optimistic numbers, and the results can be seen on the ground through the financial performance of public shareholding stock companies and other major companies since the easing of emergency measures to limit the spread of the COVID-19, and considering that the continuity of the exchange was disrupted by two suspensions of activity in 2020.

The securities sector plays an important role in the field of economic development and is considered one of the most promising sectors in Palestine in terms of the infrastructure regulating the exchange of securities process and in terms of its use of modern systems that are equivalent to the best in the world.

The securities sector constitutes 22 percent of GDP, which amounted to US$15.5 billion in the 2021 financial year. In the first nine months of 2021, the Al-Quds Index increased 32 percent in value compared with the same period in 2020, and the market value of companies listed on the Palestine Exchange has increased by nearly US$1 billion to US$4.2 billion.

The value of traded shares during that time increased by 109 percent to about $282 million, while the number of traded shares rose 131 percent (or approximately 143 million shares.

Global representation

The PCMA is also spearheading Palestinian representation in international organisations, such as the International Union for Housing Finance (IUHF), the International Association of Insurance Supervisors (IAIS), the Union of Arab Securities Authorities, the Arab Union of Insurance Supervisors, and the Arab General Insurance Union.

The Palestine Exchange, meanwhile, has gained full membership of the World Federation of Exchanges, the Federation of Arab Capital Markets, the Federation of Eurasian Stock Exchanges, the Forum of Stock Exchanges of Islamic Countries, and others. The exchange has also won inclusion in Morgan Stanley and Standard & Poor's indices as a result of its commitment to all required standards, whether from the regulator represented by the PCMA or through adherence to the international standards required by these bodies.