VZCZCXYZ0001
OO RUEHWEB

DE RUEHJM #3679/01 2301422
ZNR UUUUU ZZH
O 181422Z AUG 06
FM AMCONSUL JERUSALEM
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4325
INFO RUEHXK/ARAB ISRAELI COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUEHBS/USEU BRUSSELS PRIORITY

UNCLAS JERUSALEM 003679 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
NEA/IPA FOR WILLIAMS/MAHER/WAECHTER; NSC FOR 
ABRAMS/DORAN/WATERS; TREASURY FOR NUGENT/ADKINS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN PGOV KWBG IS
SUBJECT: PALESTINIAN STOCK MARKET ENDS FREEFALL; REGULATORS 
PRESS UNLISTED COMPANIES 
 
REF: JERUSALEM 2443 
 
¶1.  (SBU) Summary.  After plummeting for months, Palestinian 
stocks have gained 20 percent since mid-July 2006.  The 
Palestinian Securities Exchange (PSE) August 13 reinstated a 
wider daily price trading range of five percent, thereby 
suggesting that concerns over market volatility have eased. 
PSE and Capital Market Authority (CMA) officials are 
insisting that all joint stock companies are listed and 
provide regular financial reports.  The PSE recently 
suspended trading in one company's shares for its failure to 
meet listing requirements.  End Summary. 
 
--------- 
Stocks Up 
--------- 
 
¶2.  (SBU) Stock prices on the Palestine Securities Exchange 
(PSE) stabilized in July 2006 and are now rising steadily. 
On July 16 -- four days after Hizballah's cross-border raid 
-- the Al-Quds Index reached its lowest point at 494.65, down 
56 percent for the year.  Since that time, however, stock 
prices have risen about 20 percent, with the Al-Quds index 
reaching 593.19 on August 17. 
 
¶3.  (SBU) Average daily trading volumes (ADTV) have been 
increasing, reaching USD 4 million for the trading week of 
August 13-17 compared to USD 1.4 million the previous week. 
The trading volume for August 17 reached 1,183,356 shares (in 
659 trades) for a total value of USD 4.16 million.  Stock 
prices for the week rose 44 points or eight percent. 
 
------------------------------------ 
Rising Confidence/Lingering Problems 
------------------------------------ 
 
¶4.  (SBU) PSE Chairman Hasan Abu-Libdeh announced August 13 
that the PSE had decided to reinstate the plus or minus five 
percent price range limit on daily trading.  (Note: The PSE 
narrowed the price range to plus or minus three percent in 
March 2006 in an effort to stem volatility in the market. 
End Note.).  In separate comments to the press August 16, 
Abu-Libdeh asserted that about 35,000 investors hold about 
USD 1 billion in Palestinian securities.  He added that 40 
percent of the funds invested in the PSE come from abroad. 
 
 
¶5.  (SBU) In his recent public comments, Abu-Libdeh 
attributed the PSE's six-month decline to the political 
situation, not just to the Palestinian Legislative Council 
(PLC) elections but also to internal tensions within Fatah. 
He added that the lack of adequate laws and regulations had 
also played a role, noting that the PLC had yet to approve a 
presidential decree allowing companies to purchase their own 
stock.  As a consequence, the PSE is examining current laws 
and regulations in an effort to improve the investment 
climate. 
 
------------------------------------- 
Pressure Rising on Unlisted Companies 
------------------------------------- 
 
¶6.  (SBU) Capital Market Authority (CMA) Chief Executive 
Officer Dr. Atef Alawneh announced August 8 at the Ramallah 
Chamber of Commerce that the CMA will start taking strict 
measures to enforce the provision of the Securities Markets 
Law obliging all joint stock companies be listed on the PSE 
and regularly disclose their financial statements.  Alawneh 
asserted that there are about 50 companies that need to join 
the 31 currently listed on the PSE.  He added that 
shareholders of unlisted companies have complained that, in 
the absence of financial reports, only company board members 
know the true financial status of these companies.  Alawneh 
warned that legal actions will be taken against shareholding 
companies failing to adhere to the law. 
 
¶7.  (SBU) In a meeting with Nablus business leaders August 
16, Abu-Libdeh stated that the PSE had recently blocked 
trading in the shares of one listed company until the 
required financial statements were provided.  (Note: Local 
press accounts identified the non-compliant company as the 
Arab Company for Cement Products.  End Note.)  Abu-Libdeh 
said that as many as six companies will be listed with the 
PSE by the end of the year, starting with the Commercial Bank 
of Palestine. 
 
 
-------------------- 
PSE Still Not Listed 
-------------------- 
 
¶8.  (SBU) Abu-Libdeh also advised August 8 that the PSE is 
withdrawing its request to the Ministry of National Economy 
(MoNE) to be registered as a shareholding company.  (Note: 
The PSE was incorporated as a private shareholding company in 
1995 with the Palestine Development and Investment Company 
(PADICO) as a major investor.  End Note.)  Abu-Libdeh 
explained that the request had been with the MoNE for four 
months due to "technical and bureaucratic measures."  A 
senior MoNE employee, however, told Arabic-language daily 
Al-Ayyam that the delay was due to four companies having been 
listed on the PSE without having provided the required 
financial statements.  Abu-Libdeh dismissed this "excuse," 
asserting that the MoNE should be able to grant PSE's request 
while setting deadlines by which time the negligent companies 
must provide the necessary financial information.  The PSE, 
CMA and MoNE are reportedly seeking an appropriate solution 
to the PSE's listing request, according to Al-Ayyam. 
Abu-Libdeh told reporters August 16 that all companies listed 
on the PSE had now presented financial disclosure documents. 
 
DUFFY