hamas rally 298.88.
(photo credit: AP [file])
The Palestinian business community reacted with concern following the Hamas victory in the Palestinian parliamentary elections that a Hamas led government would bring an end to economic aid and foreign investment as the Palestinian Securities Exchange had its worst day in four years on news of the Palestinian election result.
The PSE dropped the maximum possible to 1,022, as the exchange doesn't allow stocks to fluctuate more than 5 percent in a day's session.
One investor in his early-30s said he and other investors were "going crazy."
"All the investors are now afraid that everything will come to a halt," said Salam Bandoli, who own stocks. "There's no demand, just selling. We fear there will be a total end to investment in the country."
The PSE had a bumper year in 2005 as the index rose by 306%, bringing its market capitalization to around $4.5 billion.
Zaid Awad, an independent Palestinian economist, attributed that growth to strong earnings by the listed companies and an improved market environment following the Israeli disengagement from Gaza.
Awad said the biggest concern amongst investors now is how Hamas will present its economic plan and sell it to the international community to guarantee the continued flow of monetary aid to the Palestinian Authority.
While the US said it would not deal with Hamas until it recognizes Israel's right to exist, the big question remains if it will continue to give financial support to the PA.
The PA receives about half of its annual budget from international aid, amounting to approximately $500 million, the majority of which comes from the US and the European Union.
As pre-election polls started to indicate a possible Hamas victory over Fatah, the US warned the Palestinian Authority that the likelihood would jeopardize continued US aid. The EU also recently indicated that a Hamas victory would cause it to reconsider its financial support to the PA.
Tareq Maayah, Chairman of the Palestinian IT Association who said he supported an independent candidate in the election, warned that an economic boycott would play into the hands of Hamas and further strengthen their support in the Palestinian areas.
Barring foreign investment however, the community was optimistic Hamas would create a more favorable environment for internal business dealings.
Maayah said that in its election campaign Hamas touched on opening the market to competition and that having new players in the market would be a good thing.
"Socioeconomic issues were not an issue in the elections, but people are fed up with the same people steering the economy and the high level of corruption prevalent therein," Maayah said. "Our biggest doubt now is on the aid. Much depends on what Hamas says in the coming days to bring back foreign investor confidence."
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