Palestine Securities Exchange PSE

Palestine Securities Exchange PSE

Contents Palestine Economy Foreign investment in Palestine Market Highlights Company Highlights Why Invest in Palestine Contacts 3 4 5-8 9-14 15-21 22 2

Millions (US$) Palestine Economy Real GDP(USD m) Real GDP growth GDP per capita (USD) Population ('000) Inflation Rate Unemployment rate Market Capitalization (USD m) Market Cap /GDP Key Economic Indicators 2013 2014 7,477 7,463 2.2% -0.2% 1,744 1,737 4,421 4,550 1.72 1.73 23.4 26.9 3,247 3,187 43.4% 42.7% 2015 7,719 3.4% 1,793 4,682 1.43 25.9 3,339 43.3% 2016 8,037 4.1% 1,807 4,867-0.22 26.9 3,390 42.2% 1Q 2017 N/A 3.2% N/A 4,950 0.21 27.40 3,891 N/A GDP Breakdown 1Q 2017 Transportation and storage 2.4 Financial and insurance activities 4.3 Agriculture, forestry and fishing 2.6 Information and communication 5.2 Construction 7.4 Other** 13.0 Mining, manufacturing, electricity and water 14.1 Public administration and defense 12.9 Wholesale and retail trade 17.2 Services 20.9 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Market Capitalization and GDP 43.4% 43.3% 41.9% 42.7% 42.2% 40.4% 40.7% 40. 39.1% 2008 2009 2010 2011 2012 2013 2014 2015 2016 44% 43% 42% 41% 4 39% 38% 37% 36% Market Capitalisation GDP Market Cap/GDP 3

Foreign Investment in Palestine 2012 2013 2014 2015 2016 2017 FDI in Palestine (USD m) 2,336 2,450 2,453 2,511 2,588 - Market Capitalization 2,859 3,247 3,187 3,339 3,390 3,891 FI in Equity (USD m) 1,170 1,324 1,354 1,321 1,330 1,446 Foreign ownership of Equity (%) Foreign institutional investors ownership (%) 35.64% 22.49% 33.87% 20.61% 36.12% 22.33% 36.86% 22.55% 34.16% 21.7 31.74% 20.52% Foreign Investment at PEX 50.0 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 2013 2014 2015 2016 2017 No. of Shareholders No. of Shares Value (USD) 4

MARKET HIGHLIGHTS- PEX at Glance Milestones Strengths Growth Challenges 2017: The agreement with Nasdaq to Buy X-Stream trading System. 2016: : Full member at the World Federation of Exchanges(WFE) - Gained "Frontier Market" exchange at FTSE indices. - Launched e-ipo system-" EKTITAB. 2015: Launched PEX E-disclosure System-IFSAH 2014: - Added Palestine to FTSE indices Watch List - Listing the first corporate bond since inception. 2013: - The highest trading value in one session 48m USD. - Launched the cash settlement through PEX. - S&P and MSCI created a stand alone index for Palestine. 2012: Listing the Palestine Securities Exchange (PSE). 2011: Listing a record seven new companies in one year. 2010: Became a public shareholding company and acquired a new corporate identity. 2009: Rated second among Arab exchanges in providing investor protection. 2007: Launched online trading service (E-Trading). 2006: Launched Investor Education Program. 2005: Al-Quds index rose by 306% achieving the highest value in global markets. 1997: The first trading session is held. 1995: Established as a private shareholding company. The PSE is the National Exchange of Palestine, no other exchange is expected to be established. The PSE has captured most Palestinian Public shareholding companies. Operating cost is declining. The PSE is diversifying its sources of income. High scope for growth (domestic penetration ratio is only of 3% today). The PSE has highly skilled human capital with proven experience. 1. The political conditions and the future uncertainty are the main challenges of the investment environment in Palestine. A positive political move will have an immediate impact on the Palestinian economy. 2. Strong competition with other regional stock markets like Jordan, Egypt & the UAE, since many local investors are active in those markets. 5

MARKET HIGHLIGHTS- PEX Structure & Key Indicators Key Indicators 2012 2013 2014 2015 2016 2017 33% Listed Companies 48 49 48 49 48 48 PEX Structure 31% Trading Value (USD m) Trading Volume ( m) Daily Avg. value (USD m) 273.4 147.30 1..09 340.8 202.9 1.41 353.9 181.5 1.44 320.39 175.2 1.3 445.15 232.82 1.82 469.07 271.16 1.93 1 22% 4% Transactions # ( 000) 41 44 41 31 34 53 Market Cap. (USD m) 60,000 50,000 40,000 2,859 3,247 3,187 3,339 3,390 3,891 Turnover ratio/yearly Number of Trades 12.97% 12.9 11.08% 10.47% 15.02% 16% 14% 12% 1 Banks & Financial Services Sector Industry Sector Insurance Sector Investment Sector Services Sector 30,000 8% 20,000 10,000 6% 4% 2% 0 2013 2014 2015 2016 2017 Number of Trades Turnover ratio 6

Millions (US$) MARKET HIGHLIGHTS- PEX Investors, Trading & Profits Key Indicators Listed Companies net profit (US$) Mill Investors No. Free Float of shares(%) 2012 78,083 44.28% 2013 75,815 41.16% 2014 73,959 42.35% 2015 73,367 42.38% 2016 72,418 41.02% 2017 71,811 38.78% 242 224 269 283 297 Institutional investors shares ownership (%) Institutional investors (%) of M.Cap 65.56% 63.82% 63.93% 62.15% 62.21% 62.66% 62.62% 61.58% 62.79% 62.48% 66.28% 64.12% P/E Vs Value traded 2009-2016 2013 2014 2015 2016 2017 600 500 400 300 10.77% 13.22% 13.79% 14.56% 13.42% 14.22% 12.41% 11.99% 16% 14% 12% 1 8% 200 100 6% 4% 2% - 2009 2010 2011 2012 2013 2014 2015 2016 Value traded P/E 7

MARKET HIGHLIGHTS- PEX Trading 1.8 1.9 1.1 0.59 1.4 1.4 0.84 1.3 0.74 0.71 0.95 1.10 2012 2013 2014 2015 2016 2017 Average Traded Value Average traded Volume 8

Company Highlights 9

COMPANY HIGHLIGHTS - PSE Ownership PSE Ownership Structure as of 31 Dec. 2017 0.01% 0.23% 2.17% Main shareholders as of 31 Dec. 2017 PADICO Holding 74.7 Capital Trust Investment Limited 5% Al Sanabil Trading & Investment Co. 97.59% 17% Others 3.3 Natural Persons Brokerage Firms and Banks Corporations Funds (Pension & investment) 10

Alquds Index PSE share price COMPANY HIGHLIGHTS - Share Performance As of 31 Dec. 2017 Name Ticker ISIN No. Market Issue Size High Price (USD) Low Price (USD) Last Price (USD) Traded Value (USD) Traded Shares No. of Transactions Market Cap ( USD Mn) Palestine Securities Exchange PSE PS1009112951 Palestine Exchange PEX 10 million Shares During 2017 4.95 4.95 4.95 990 200 2 49.50 590.00 585.00 580.00 575.00 570.00 565.00 560.00 555.00 550.00 545.00 540.00 535.00 530.00 525.00 520.00 515.00 Al Quds Index 27/12/2017 19/12/2017 12/12/2017 5/12/2017 11/27/2017 11/20/2017 11/12/2017 11/5/2017 29/10/2017 22/10/2017 15/10/2017 8/10/2017 1/10/2017 24/09/2017 14/09/2017 7/9/2017 28/08/2017 21/08/2017 14/08/2017 7/8/2017 31/07/2017 24/07/2017 17/07/2017 10/7/2017 3/7/2017 20/06/2017 13/06/2017 6/6/2017 30/05/2017 23/05/2017 15/05/2017 8/5/2017 30/04/2017 19/04/2017 11/4/2017 4/4/2017 28/03/2017 21/03/2017 14/03/2017 6/3/2017 27/02/2017 20/02/2017 13/02/2017 6/2/2017 30/01/2017 23/01/2017 16/01/2017 9/1/2017 2/1/2017 5.00 4.99 4.98 4.97 4.96 4.95 4.94 4.93 4.92 4.91 4.90 11

USD Millions Company HIGHLIGHTS - Financial Performance Operating revenues increased by 6.6% yoy in 2017. Op. cost was increased (1) yoy in 2017 due to the early retirement program. 13 employees benefited from the program. 4.00 3.50 Revenue Revenue Structure Structure USD 000 Operating Income Operating Cost Operating Result EBIT EBITDA Net Profit/Loss EPS (USD) 2017 2,833,885-2,773,361 60,524 791,687 972,607 684,201 0.068 2016 2,659,181-2,513,965 145,216 783,584 984,254 642,895 0.064 2015 2,056,552-2,189,205-132,653 452,279 657,423 374,655 0.037 2014 2,184,606-2,407,220-222,614 281,258 590,673 243,224 0.024 2013 2,074,535-2,774,513-699,978-219,630 137,219-219,630-0.022 3.00 2.50 2.00 1.50 1.00 10 8 6 4 Cost Structure 0.50 2 0.00 2017 2016 2015 2014 2013 2013 2014 2015 2016 2017 Trading and transfer commissions Membership and registration fees Salaries and related expenses Securities collateral commission Other operating revenues Other general and administrative expenses Interest revenues Investment revenues Depreciation Other revenues 12

COMPANY HIGHLIGHTS - Main Priorities & Projects Apply BPM in PEX Depts. Renew & Replace main servers and electronic infrastructure. Co operate with EBRD on a gap analysis study for Palestine securities sector. Target family owned & public companies for listing. Prepare for the new core system (X-Stream). Review laws, regulations and rules in light of the new core system. Go on with the public awareness activities & enhance PEX presence in social media. 13

WHY INVEST IN PALESTINE 14

WHY PALESTINE - Corporate TAX Income Tax Rate Capital Gains Tax Dividend Tax Rate Palestine 15% Palestine 15% (Suspended) Palestine 5% (Suspended) Jordan 35% Jordan Jordan Egypt 22.5 Egypt 1 Egypt 1 Lebanon KSA Kuwait Qatar UAE Turkey Israel 1 15% 15% 2 2 24% Lebanon KSA Kuwait Qatar UAE Turkey Israel 1 2 15% 2 24% Lebanon KSA Kuwait Qatar UAE Turkey Israel 5% 1 15% 15% 3 Source: World wide Corporate Tax Guide 2017- Ernest & Young official website 15

WHY PALESTINE - Natural Persons TAX Capital Gains TAX Dividend Tax Rate Palestine 15% (Suspended) Palestine 1 (Suspended) Jordan Jordan Egypt Egypt 1 Lebanon 1 Lebanon 1 KSA KSA 5% Kuwait Kuwait Qatar Qatar UAE UAE Turkey Turkey 15% Israel 25% Israel 25% Source: World wide Personal Tax & Immigration Guide 2017- Ernest & Young official website 16

WHY PALESTINE - Ease of Doing Business (2017 Ranking) New Zealand UAE Bahrain KSA Jordan Palestine Argentina Iran Brazil Egypt Lebanon Algeria Iraq Sudan Syria Libya 1 21 66 92 103 114 117 124 125 128 133 166 168 Getting Credit 20 170 174 Trading Cross Border 49 185 Source: Doing Business 2017- World Bank Group official website. 17

WHY PALESTINE - Dividend Yield Vs Interest Rates on Deposits 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 2012 2013 2014 2015 2016 USD Rate JOD Rate ILS Rate Dividend Yield Source: Palestine Monetary Authority - Official Website. 18

WHY PALESTINE - PEX Potentials & Opportunities PEX P/E Dividend Yield Net profits Vs Dividends (USD m) 14.56 13.42 14.22 12.41 11.99 6.43% 5.92% 6.11% 5.94% 300 250 200 5.58% 150 100 50 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016-2012 2013 2014 2015 2016 Net Profits Dividends 19

WHY PALESTINE - Arab Markets Performance 2017 50.0 40.0 Damascus was the highest with 269.87% 30.0 20.0 10.0 8.38% 0.0-10.0-20.0-30.0 20

WHY PALESTINE - P/E comparing with Arab Markets 29.37 21.29 21.68 13.8 13.87 15.43 15.68 16.95 17.8 11.29 11.77 7.85 8.55 Bahrain Beirut Egypt Muscat Qatar Palestine Kuwait Abu Dhabi Saudi Tunis Dubai Casablanca Amman Source: Bloomberg 31-12-2017 21

WHY PALESTINE - Dividend Yield Comparing with Arab Markets 5.87 5.57 5.41 5.14 4.84 4.62 4.57 4.22 3.7 3.39 2.65 2.56 2.21 Source: Bloomberg 31-12-2017 22

WHY PALESTINE - Trading Fees Comparison 0.012 0.01 5 discount is applicable 0.008 0.006 0.004 0.002 Iraq Palestine Syria Mascut Lebanon Dubai Abu Dhabi Bahrain Qatar Jordan Kuwait KSA Egypt 0 Source: 2016 Trading fees-exchanges Official Websites. 23

Contacts Palestine Securities Exchange plc., Mohammad Khraim Manager of Public Relations & Investor Education Nablus- Amman St., Trust Building, 4 th floor P.O Box 128, Nablus-Palestine Tel: +970 (or 972) 9 2390 945 Fax: +970 (or 972) 9 2390 998 E-mail: ir@pex.ps 24