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2 PSE has a clear Vision & Mission PSE VISION To create a model for Arab and regional financial markets, through: providing innovative services, proposing ideal investment opportunities in securities, attracting investments, the use of state of the art technology, compliance to the rules of corporate governance, and establishing constructive relations with Arab, regional and global markets. To provide a fair, transparent and efficient market for trading securities that: serves investors, protects their interests, contributes in creating an enabling environment that attracts local and foreign investments, interacts with local and Arab relevant institutions, in a manner that serves the national economy and enhances the culture of investment in financial markets. PSE MISSION

3 The PSE has been trading since Palestine Development and Investment Company (PADICO) and Palestine National Authority sign an agreement for operating the securities exchange 1997First trading session held 2009A well established exchange with turnover in 2009 of US$ 500 million and a market capitalization of $ 2.37 billion 2010Public Shareholding Company

4 39 companies are listed on the PSE Sector No. of companies Market Capitalization (US$) (as of 31 December 2009) Banking 7601,381,086 Insurance 591,712,716 Investment 8426,815,786 Industry 10179,229,307 Services 91,076,227,636 TOTAL Market CAP as of 31 Dec ,375,366,531

5 New capital raised by shares Initial Public Offerings (value of money raised at first listing): 2008 (US$) 2009 (US$) 12,738,43645,471,808 Secondary public offerings (new capital raised for companies already traded): 2008 (US$) 2009 (US$) 15,508,69210,869,054

Expected listing for 2010 Value (USD) No. of Shares to be listed Company 10,000,00010 million sharesAl-Wataniah Towers Co. 2,298, million sharesThe Ramallah Summer Resorts Co. 5,000,0005 million sharesPalestine Insurance Co. 7,721,1355 million shares Dar-Al-Shifa Company for Manufacturing of Pharmaceuticals (Pharmacare) million sharesWataniya Mobile 70,000,00070 million sharesArab Palestinian Investment Company (APIC) 1,500, million sharesClub Palestino of Chile 6

7 Ownership Profile

Regulatory Framework PCMA was established in 2005 Securities Law No. (12) of the year 2004 Companies Law No. (12) of the year 1964 PSE regulations: Trading, Listing, Disclosure, Dispute settlement, Code of Corporate Governance Applicable regulations at the PSE are compatible with best international practices Seeking WFE membership 8

999 the PSE System: Horizon, NASDAQ OMX E-Trading since 2007 (one of the first in the Arab World) Fully automated trading, clearing, and settlement system

the PSE SMARTS Best of breed application Adopted by the PSE and the Palestinian Capital Market Authority Monitors the trading session instantly to detect any unusual behaviors of prices or trading volumes Any violation is subject to the adopted penalties and fines. 10

11 Foreign investment Friendly and encouraging legal and regulatory environment vis-à-vis foreign investment in the stock exchange. No capital gain taxes and no income tax on the revenues generated out of trading. The only determinant for foreign investments is the preferences of listed companies for foreign ownership of shares in their capital. Custodian: HSBC

PSE Daily turn over since inception 12

Composition of the Al-Quds Index 13 SectorListed CompanySymbol Weight of index (as of 28/2/2010) Banking Arab Islamic Bank AIB 2.31% Alrafah Microfinance Bank AMB 1.07% Bank of Palestine BOP 18.12% Industrial Birzeit Pharmaceuticals BPC 3.55% Golden Wheat Mills GMC 0.74% Insurance Ahliea Insurance Group AIG 1.21% Investment Palestine Development and Investment PADICO 15.91% Palestine Industrial Investment PIIC 0.93% Union Construction and Investment UCI 1.31% Services Palestine Telecommunications PALTEL 51.36% Palestine Electric PEC 3.23 Palestine for Distribution & logistics Services WASSEL0.25

Turn Over ratios for Sector Listed Companies ( included in Al-Quds index) Turn Over Ratio 2009 Daily Average Turn Over Value US$ 2009 Banking Arab Islamic Bank ,686 Alrafah Microfinance Bank ,134 Bank of Palestine ,603 Industrial Birzeit Pharmaceuticals Golden Wheat Mills ,503 Jerusalem Cigarette ,734 Insurance Ahliea Insurance Group Investment Palestine Development and Investment ,902 Palestine Real Estate Investment ,267 Union Construction and Investment ,525 Services Palestine Telecommunications ,366 Palestine Electric ,204

15 %value $%No. of Shares% No. of Shareholders Client type ,135, ,002, , Retail investors ,104, ,021, Institutions ,693, ,844, Related Party ,478, ,339, Government 1002,372,412, ,082,208, , TOTAL Breakdown between: Retail Investors and Institutions

16 Ownership structure of listed companies by nationality %value $%No. of shares% No. of shareholders Nationality 52.43%1,243,738, %595,346, %70,959 Locals 15.72%372,919, %222,534, %2,260 Arabs 7.49%177,588, %77,365, %221 Gulf 9.01%213,740, %80,470, %304 Western 15.36%364,424, %106,491, %720 Others 100%2,372,412,027100%1,082,208,617100%74,464 TOTAL

17 More positive intervention will lead for better economic growth and stability Steady GDP/GNI with growing inward flows and consumption GDP (current US$ millions)4,5594,3224,5364,639 GNI per capita, (current us$)1,5191,4891,494-- Current transfers, non-residents (net, $m)1,1281,2782,0933,169 Final consumption ($m)5,6095,7726,086--

18 Comparison of trading activity (2009 with 2008) No. of Trading Sessions VolumeValue ($) No. of Trans. Daily average turnover value ($) Market Capitalization ($) Al-Quds index ,168,8071,185,204,211152,3194,857,3942,123,057, ,877,373500,393,39888,8382,034,1202,375,366, Change% %-57.78%-41.68%-58.12%11.88%11.62

19 PSE in comparison with other regional exchanges

20 PSE recovers from the impact of the current global crisis with good performance In 2009, MENA markets de-coupled then re-coupled, but not entirely! In 2009, MENA markets de-coupled then re-coupled, but not entirely! PSE stands in the mid between regional markets Stock Index variation December 2009 with December 2008 Exchange% TUNIS STOCK EXCHANGE 48.50% EGYPT CAPITAL MARKET 34.73% BEIRUT STOCK EXCHANGE 32.96% MUSCAT SECURITIES MARKET 17.05% ABU DHABI SECURITIES MARKET 14.79% PALESTINE SECURITIES EXCHANGE 11.62% DUBAI FINANCIAL MARKET 10.22% DOHA SECURITIES MARKET 1.06% CASABLANCA STOCK EXCHANGE -4.92% AMMAN STOCK EXCHANGE -8.15% KUWAIT STOCK MARKET -9.99% BAHRAIN STOCK EXCHANGE %

21 The Palestinian stock market recovery is relatively steady

Daily closing of Al-Quds Index during

23 ALL FIGURES IN US$ Gross revenues11,781,3085,349,3935,065,587 5,538,0834,011,669 Operating costs1,310,3831,717,9462,287,317 2,812,7332,614,154 Net income (AFTER TAX)8,730,9233,033,2252,312,722 2,157,01146,247 Equity6,889,1639,922,38814,325,617 12,617,85811,671, Non-Current Assets 448,0182,888,0757,660,69110,987,50710,661,382 Current Assets 8,742,5769,044,2587,412,1743,634,3341,832,241 Total Assets 9,190,59411,932,33315,072,86514,621,84112,493,623 Equity and Liabilities Total Equity6,889,1639,922,38814,325,61712,617,858 11,671,610 Non-Current Liabilities317,656202,740273,911347, ,071 Current Liabilities1,983,7751,807,205473,3371,656, ,943 Total Liabilites2,301,4312,009,945747,2482,003, ,013 Total Equity and Liabilities9,190,59411,932,33315,072,86514,621,841 12,493,623 PSE : A Functioning Profitable Business

Why invest in the PSE? Small, yet robust and growing fast Great spring back potential Efficient structure & operations within best international practice Regulated market within international standards PSE: Tried & “TESTED” Undervalued stocks Listed companies: consistent good financial performance Strong reliable infrastructure and banking sector Strong donor support in state building 24

Thank You 25