Investors seeking to buy shares should seek professional advice before investing in the Exchange. The following are some investment considerations and risks associated with shares:
1. Political and economic trends:
The Exchange is registered in Palestine with headquarters based in the city of Nablus. Palestine has been influenced by political fluctuations over the past years and especially during the years of the Intifada, which have adversely affected the Palestinian economy causing high unemployment rates leading to poverty and limited investment.
2. Risks of legislation
Despite the significant change created by the adoption of the Securities Law No. 12 in 2004, the legislative branch has yet to complete the enactment the entire package of commercial and financial sector laws, which would have enhanced the investment environment in Palestine. Any change in existing legislation may affect the activities of the Exchange.
The Exchange is supervised by the Capital Market Authority and the instructions it issues; it is the regulator of the non-bank financial sector, including the securities industry, brokerage firms and their activities, securities advisers and others persons working in the securities sector. Any changes to the rules and regulations issued by the Capital Market Authority may affect the activities of the Exchange. Also note that the Capital Market Authority receives fees assessed as a percentage of the Exchange’s commissions, being the main source of income for the Exchange
3. Competitive edge
Like other countries in the region (except the United Arab Emirates which has a special political characteristic), Palestine has one exchange only. Considering most other countries, including the most dominant ones, also have only one exchange, it is not expected that a second exchange will be established. Further, the Exchange has captured most public limited liability shareholding companies . The real competition lies in nearby markets which sometimes drain liquidity from our economy and Exchange since local investors invest in other Arab markets especially in Jordan, Egypt and the UAE.
4. Stock price volatility
Despite the controls placed on the trading of shares following listing, share prices are subject to market fluctuations. There will be no guarantee that the value of the shares will rise or that the share price does not fall once listed.
5. Exchange dividend policy
Our dividend policy depends upon profitability and the availability of sufficient reserves to distribute those dividends to shareholders. Dividend distribution is not guaranteed.
6. Risk of legal action
The Exchange has no pending legal actions. Foreseeable potential legal risks that we may be exposed to may arise from third party claims in relation to multi-party trading. There have been no such claims or any other claims brought against the Exchange.