In 2007, Palestine Securities Exchange (PSE) saw a 34.5 percent increase in total number of shares traded. This included the listing of 3 news companies; one of which was Al Rafah Microfinance Bank on April 29^th 2007. The bank is one of 6 companies listed in the exchanges banking sector and trades with the stock symbol AMB.

Since it began trading, AMB has fallen roughly 21.2 percent, with most of the decline occurring immediately after listing. Over the same period, PSE’s banking sector also declined 11.8 percent. The PSE’s Al Quds Index increased 14.2 percent due to recuperations late in the year; however it fell 12.8 percent in 2007 and 46.4 percent in 2006.

This year, there have been gains across the board however. Year-to-date, the Al Quds Index gained 13.3 percent; the banking index increased 4.1 percent; and AMB gained 2.2 percent.  The overall rise could be attributed to increased hopes of an accelerated peace process with Israel or attractive valuation levels. With little news or stock research, it’s difficult to determine what idiosyncratic factors have contributed to the lag in AMB’s stock performance.

Al Rafah Microfinance Bank is an initiative of the Young Arab Leaders, an independent non-profit association. Founded in 2005, it is a major financial institution in the Palestinian Authority which started with roughly USD 30 million in equity capital. The bank provides small direct loans of USD 500 to 25,000 to individuals or groups, poverty alleviation loans, and intermediary loans to co-operative, charitable, and agricultural societies. It also provides savings plans and insurance. The bank does not report to the Mix Market, the microfinance information clearinghouse.

Regarding financials, AMB has the second smallest market capitalization of companies listed in the Banking index at USD 25.2 million. In 2007, it reported net profit margin of 24.4 percent, an average ROA of 1.15 percent, and an average ROE of 3.08 percent. Finally, AMB has 30 million shares trading with local individuals and local companies as the largest shareholders at 60.6 percent and 34.6 percent respectively.

The PSE has been in existence for roughly ten years, with a total market capitalization of USD 2.1 billion as of August 2007. The exchange lists 35 companies with 12 of those comprising the PSE’s Al Quds Index. The PSE also began executing online trading transactions in April of 2007, which likely contributed to the increase in overall trading.

by Jennifer Lee

Additional Sources:

Palestine Securities Exchange: Home, AMB

Young Arab Leaders: Home, Al Rafah Microfinance Bank

“Shares Trading on Palestine Securities Exchange up 34%”, by Global Investment House, February 28, 2008.