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If Hamas Won't Renounce Terror, Tank their Stock Market

10:41 AM, Jan 31, 2006 • By DANIEL MCKIVERGAN
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Investor flight is a big worry for Hamas, who now must grapple with the economic consequences of their policies. Before the recent election, the Palestinian Stock Exchange was very bullish. In 2005, the Al-Quds index of the exchange produced gains of nearly 310 percent in 2005, putting its capitalization at about $5 billion -- a figure, Barron's claims, is "as big or bigger than stock markets in seven of the 10 new European Union members....." A fund manager attributed the run-up to the Israeli withdrawal from Gaza and the "hope that billions of dollars in promised investments will flow from the G-8 countries." But since Hamas' election, Beirut's Daily Star reports that the index is off five percent with "many share offers failing to find buyers." And Hamas is clearly worried about more investor flight.

Today's Daily Star further reports:

Hamas seeks to reassure stock market investors
Palestinian Financial Markets Plummet in Wake of threats to cut aid

Hamas on Monday sought to reassure investors in the Palestinian economy that their stocks would be safe under the Muslim fundamentalist group after it shot to power in last week's general election....

"After noting the sharp drop in Palestinian financial markets since Thursday, we want to reassure investors that Hamas considers the [stock exchange] an essential pillar of our national economy," said a statement.

"Hamas realizes that tens of thousands of Palestinian families have invested in this market and we assure them that the movement's economic policy will stimulate and develop this market."

...Assurances came on the heels of threats from the international community to cut aid to the Palestinian Authority (PA) should Hamas take power.

Elections have consequences. If Hamas won't reject terrorism and accept Israel's right to exist and the legitimacy of the peace process based on the concept of peaceful coexistence, the U.S. should use its leverage to nose drive the Al-Quds -- which, according to David Grayson of Auerbach Grayson & Company in New York, has also benefited from "institutional clients in the U.S. execut[ing] orders" on the exchange.

The ball is in Hamas' court.