Palestine Securities Exchange 2009 Newsletter January 2010

Transcription

1 Palestine Securities Exchange 29 Newsletter January 21 Research Division Al-Arabi Investment Group P.O.Box Amman, Jordan T: F: research@ab-invest.net Research Analyst Ahmed Saadeh T: ext.159 Ahmad.saadeh@ab-invest.net Senior Analyst Aram Rabadi T: ext.124 Aram.rabadi@ab-invest.net Brokerage Division brokerage@ab-invest.net T:

2 The three-year downward performance of the Al-Quds Index reached an end this year. The rebound in the performance was clear through the first quarter of the year when the Index was to be the best performing index in the Middle East & North Africa (MENA) region. The index then experienced a sharp decline in July affected by the investors' fears about the companies' first half results. The index recovered slowly after that to end the year with 12% gain. Palestinian companies were able to avoid the global financial crises and showed stability in their financial performance with limited exposure to high risk activities in the region, which resulted in an attractive fundamental outlook. The solid fundamentals were the main reason behind the good market performance. Despite the political restrictions imposed on the Palestinian economy and the shallow depth of the market in terms of trading volumes and listed companies, the PSE market was able to outperform most of the GCC markets such as Bahrain, Kuwait, and Qatar, and some of the Levant mature markets, such as Jordan. 29 MENA Performance 48% 5% 4% 36% 33% 32% 27% 3% 18% 17% 2% 17% 15% 12% 1% 1% 1% -5% -8% -1% -19% % -1% -2% Source: Zawya & Bloomberg 35% 25% 15% 5% Tunisia Egypt Lebanon MSCI World Saudi Arabia MSCI GCC MSCI Arabian Oman Abu Dhabi Palestine Dubai Qatar Morocco Jordan Kuwait Bahrain Al-Quds Index Historical Performance 1-Year Average Return 27.52% 2 37% 1 54% 12% 19% % -12% -6% -22% -46% -13% -16% Al-Quds Index PSE Historical Trading 2,5 2,96 2, 1,5 1,185 1,67 1, The trading activity of the market was affected substantially by the global financial crises, specifically the Palestinian investors' level of confidence. However, the trading value for the year reached 5 million in comparison to 1,185 million in 28, and the number of traded shares reached 239 million compared to 339 million the year before. The market was more active in the first half of the year then in the second half US D M il. S ha re s M il. MENA P/E Ratios Saudi Arabia Levant Jordan Kuwait Source: Zawya & AB Invest North Africa GCC Qatar Egypt Dubai Palesti ne Abu Dhabi Bahrain Oman 5.1 1

3 The performance of the banking index was remarkable through the year. The index ended-up being the best performing index in the market with a 31% gain. The trading value of the sector reached 177 million and accounted for 36% of the market's trading value. Bank of Palestine (BOP) led the sector in this hike after gaining 65% to close at BOP showed strong financial results that were not affected by the global financial crisis, and this reflected in the stock performance. BOP accounted for 24% of the market's trading value. Al- Quds Bank for Development & Investment (QUDS) gained 34% this year which resulted from a recovery in its financials. QUDS ended the year at Meanwhile, Palestine Investment Bank (PIBC) failed to reflect its stable financial performance and dropped 38% to become the market's worst performer and to close at 1.2. Palestine Islamic Bank for Development & Finance (ISBK) joined the market as a publicly listed company towards the middle of the year at a par value of 1. per share, but suffered a sharp drop in the price after losing 3% to end the year at.7. After dropping 18% in 28, the industry index rebounded this year by gaining 2%. The trading value of the sector reached 27 million and accounted for 5% of the market's trading value. Palestine Poultry Co. (AZIZA) enjoyed a wonderful performance this year after gaining 12% to be the market's best performer and to close at JOD1.35. Vegetable Oil Industries Co. (VOIC) followed, and gained 28% to close at JOD % 3% 2% 1% % -1% De c % 3.% 25.% 2.% 15.% 1.% 5.%.% -5.% -1.% 13.4%.% Al-Quds Index 29 Performance.8% 29 Average Return.81%.6% 2.4% 1.9%.3%.1%.4% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -1.1% -1.8% -7.4% 4 Al-Quds Index 29 Trading Activity Jan Feb M ar Apr M ay Jun Jul Aug Sep Oct Nov Dec 3.6% M il. Share M il. Main Sectors Performance 2.2% -7.2% 2.% 6.2% Banking Industry Insurance Investment Services Services, 35% Sectors Trading Contribution Investm ent, 23% Industry, 5% Insurance, 1% Banking, 36%

4 Despite enjoying better fundamentals compared to 28, Jerusalem Cigarettes Co. (JCC) was the sector's worst performer after dropping by 17% to close at JOD2.95. Golden Wheat Mills Co. (GMC) followed and dropped 7% to close at JOD.78. The insurance index continued its downward performance and dropped by 7% this year to be the only declining index in the market. The trading value of the sector reached 7 million and accounted for 1% of the market's activity. 4% 3% 2% 1% % -1% -2% 5% Banking Sector Historical Performance -5.3% -3.1% -14.7% 3.6% Index Industry Sector Historical Performance 2.2% Al-Mashriq Insurance Co. (MIC) was the sector's best performer after gaining 37% to close at.64. National Insurance Co. (NIC) followed and gained 1% to close at Meanwhile, Arab Insurance Establishment (AIE) was the sector's worst performer after dropping 33% to close at.36. Trust International Insurance Co. (TRUST) followed and dropped 28% to close at The investment index gained 2% this year, and the sector's trading value reached 117 million and accounted for 23% of the market's trading value. Palestine Development & Investment Co. (PADICO) was the market's most active in terms of traded shares, and accounted for 17% of the market' trading value. PADICO dropped 2% to close at % -5% -1% -15% -2% -25% 3% 2% 1% % -1% -2% -3% -4% -5% % -8.8% Index -17.7% Insurance Sector Historical Performance 22.4% % Index -25.4% Investment Sector Historical Performance -7.2% Palestine Industrial Investment Co. (PIIC) was the sector's best performer after gaining 75% to close at JOD.7. Palestine Real Estate Investment Co. (PRICO) followed and gained 17% to close at JOD.81. On the other hand, Jerusalem Real Estate Investment Co. (JREI) was the sector's worst performer 1% % -1% -2% -3% -4% -5% -42.6% -23.1% -42.2% 2.% Index

5 after dropping 22% to close at.94. Arab Investors Co. (ARAB) followed and dropped 8% to close at JOD.6. The services sector rebounded this year after gaining 6%. The trading value of the sector reached 173 million and accounted for 35% of the market's trading value. Palestine Telecommunications Group (PALTEL) was the market's most active and accounted for 32% of the market's trading value. PALTEL gained 4% to close at JOD5.14. Arab Palestinian Shopping Centers (PLAZA) was the sector's top performer with a remarkable 77% gain to close at JOD.7. Palestine Electric Co. (PEC) followed and gained 53% to close at 1.4. Moreover, Arab Real Estate Establishment Co. (ARE) gained 5% to close at JOD.54. Meanwhile, Palestine for Distribution & Logistics Services (WASSEL) was the sector's only decliner after dropping 15% to close at JOD.56. Services Sector Historical Performance 6.2% 1% % % -3.7% -2.8% -2% -3% -4% -5% -46.2% Index Market Outlook Palestinian banks were able to overcome the negative effects of the global financial crisis, while improving their financial performance. The banks resumed their natural role of injecting money in the economy, without getting exposed to high risk assets. In return, Palestinian companies proved their credit worthiness, stability, and strong financial positions by getting involved in real investment opportunities. Subsequently, the economy did not suffer a credit crunch and avoided illiquidity problems, which prevented the country from going into a recession. We expect companies to continue to show strong fundamentals and banks to continue to extend the credit needed, helping the economy to continue its growth. Global markets have recovered, but not as fast as we hope for. However, the added stability will increase the level of confidence in the Palestinian market which will increase its attractiveness to investors as a part of the frontier markets group. If Palestinian companies sustain the strong growth they posted in 29 into 21, the market will be offering a real attractive opportunity, given the attractive valuations of the listed companies. Oil prices are moving up as a result of the increasing global demand, carrying good news for the GCC region and to the Palestinian expatriates working there, who will continue to pump remittances into the Palestinian economy and market. Moreover, the added stability in revenue in the GCC might translate into higher direct and indirect investments by GCC investors in the economy and the PSE. As a special case, the PSE remains at the mercy of politics. While the situation can deteriorate fast, the possibility of a positive break-through is strong, given the renewed interest by regional and global powers to rejuvenate the Arab-Israeli peace process. 4

6 Appendix I Top Five List Best Performers Name Ticker Market Cap. () YOY* Palestine Poultry Co. AZIZA JOD1.35 1,, 13,5, 342, , % Arab Palestinian Shopping Centers PLAZA JOD.7 7,, 4,9, 213,51 265, % Palestine Industrial Investment PIIC JOD.7 18,75, 13,125, 4,178,472 5,418,82 75.% Bank of Palestine BOP ,, 375,, 119,458,468 34,51, % Palestine Electric Co. PEC 1.4 6,, 62,4, 3,937,654 4,317, % Worst Performers Name Ticker Market Cap. () YOY* Palestine Investment Bank PIBC 1.2 4,, 48,, 267, , % Arab Insurance Establishment AIE JOD.36 1,, 36, 11,92 19, % Palestine Islamic Bank for ISBK.7 35,941,87 25,158,761 4,323,212 5,79,9-3.% Trust International Insurance Co. TRUST ,25, 23,512,5 916, , % Jerusalem Real Estate Investment JREI.94 1,, 9,4, 1,48,18 1,135, % Most Active ( ) Name Ticker Market Cap. () YOY* Palestine Development & Investment PADICO ,, 297,5, 86,461,211 62,585, % Bank of Palestine BOP ,, 375,, 119,458,468 34,51, % Arab Islamic Bank AIB ,696,939 46,81,48 26,255,882 2,772, % Palestine Telecommunication Group PALTEL JOD ,625, 676,552,5 16,963,837 19,622,32 4.5% Al-Quds Bank for Development & Investment QUDS ,, 6,5, 16,48,523 19,368, % Most Active ( ) Name Ticker Market Cap. () YOY* Palestine Telecommunication Group PALTEL JOD ,625, 676,552,5 16,963,837 19,622,32 4.5% Bank of Palestine BOP ,, 375,, 119,458,468 34,51, % Palestine Development & Investment PADICO ,, 297,5, 86,461,211 62,585, % Arab Islamic Bank AIB ,696,939 46,81,48 26,255,882 2,772, % Palestine Real Estate Investment PRICO JOD.81 48,75, 39,487,5 2,557,247 18,499, % * Year-on-Year figures were calculated based on changes in market capitalization 5

7 Palestine Securities Exchange 29 Newsletter January 21 Appendix II Market Scan Name Ticker Sector Currency Market Cap. () YOY Arab Islamic Bank AIB Banking ,696,939 46,81,48 26,255,882 2,772, % Alrafah Microfinance Bank AMB Banking.73 3,, 21,9, 8,563,772 11,385, % Bank of Palestine BOP Banking ,, 375,, 119,458,468 34,51, % Palestine Islamic Bank for ISBK Banking.7 35,941,87 25,158,761 4,323,212 5,79,9-3.% Palestine Commercial Bank PCB Banking.8 3,23,56 24,18,445 1,536,57 1,919, % Palestine Investment Bank PIBC Banking 1.2 4,, 48,, 267, , % Al-Quds Bank for Development & Investment QUDS Banking ,, 6,5, 16,48,523 19,368, % Arab Concrete Products ACPC Industry JOD.31 66, 288,486.% Arab Company for Paints Products APC Industry JOD 1.8 1,5, 2,284,2 37,77 24, % Palestine Poultry AZIZA Industry JOD ,, 19,35, 342, , % Birzeit Pharmaceutical BPC Industry JOD ,1, 64,661,19 11,487,222 2,143, % Golden Wheat Mills GMC Industry JOD.78 15,, 16,497, 8,231,152 7,11, % Jerusalem Cigarette JCC Industry JOD ,, 29,116,5 3,825, , % Jerusalem Pharmaceutical JPH Industry JOD ,, 29,257,5 1,245, , % Palestine Plastic Industrial LADAEN Industry JOD.3 7,, 2,961, 93,95 28, % National Carton Industries NCI Industry JOD.29 5,, 2,44,5 981,624 2,329,484.% The Vegetable Oil Industries VOIC Industry JOD ,, 13,28,4 885,77 354, % Arab Insurance Establishment AIE Insurance JOD.36 1,, 57,6 11,92 19, % Ahliea Insurance Group AIG Insurance.83 33,499,348 27,84,459 3,24,57 4,3, % AL.Mashriq Insurance MIC Insurance.64 7,2, 4,68, 666,174 1,227, % National Insurance NIC Insurance ,, 35,28, 1,683, , % Trust International Insurance TRUST Insurance ,25, 23,512,5 916, , % Arab Investors ARAB Investment JOD.6 9,452,329 7,996,67 757, , % AL-I'teman Investment & Development IID Investment JOD.76 4,, 4,286, % Jerusalem Real Estate Investment JREI Investment.94 1,, 9,4, 1,48,18 1,135, % Palestine Development & Investment PADICO Investment ,, 297,5, 86,461,211 62,585, % Palestine Investment and Development PID Investment JOD.97 4,84,419 6,62, ,473 41, % Palestine Industrial Investment PIIC Investment JOD.7 18,75, 18,56,25 4,178,472 5,418,82 75.% Palestine Real Estate Investment PRICO Investment JOD.81 48,75, 55,677,375 2,557,247 18,499, % Union Construction and Investment UCI Investment.67 4,, 26,8, 3,56,67 4,817,469.% Arab Hotels AHC Services JOD.88 24,426,945 3,38,953 3,752,389 3,422, % The Arab Real Estate Establishment ARE Services JOD ,89 722,485 95,73 155,836 5.% Globalcom Telecommunications PLC GCOM Services 1. 9,53,721 9,53, ,628 68,843.% Grand Park Hotel & Resorts HOTEL Services JOD ,333,71 3,646,482 1,541,13 1,461, % Nablus Surgical Center NSC Services JOD.54 3,177,813 2,419, , ,64.% Palestine Telecommunication Group PALTEL Services JOD ,625, 953,939,25 16,963,837 19,622,32 4.5% Palestine Electric Co. PEC Services 1.4 6,, 62,4, 3,937,654 4,317, % Arab Palestinian Shopping Centers PLAZA Services JOD.7 7,, 6,99, 213,51 265, % Palestine for Distribution & Logistics Services WASSEL Services JOD.56 6,5, 5,132,4 1,419,872 1,66, % 6

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