Pssssst. I’ve got a stock tip. Ready? The Al-Quds Index.

What’s that? It’s the P.S.E., or Palestine Securities Exchange. Based in Nablus, in the West Bank , the Al-Quds Index has actually been having a solid year — and therein lies a tale.

“It has outperformed the stock exchanges of most Arab countries,” said Samir Hulileh, the C.E.O. of Palestine Development and Investment, which owns the exchange. The P.S.E. was established in 1996 with 19 companies and now has 41 — and 8 more will join this year. The companies listed there include the Commercial Bank of Palestine, Nablus Surgical Center, Palestine Electric Company and Arab Palestinian Shopping Centers. “Most are underpriced because of the political risk component,” said Hulileh. So if you don’t mind a little volatility, there is a lot of potential upside here. Indeed, there will soon be an E.T.F. — an exchange-traded fund — that tracks the Al-Quds Index so you can sit in America and go long or short peace in Palestine.

The expansion of the Al-Quds Index is part of a broader set of changes initiated in the West Bank in the last few years under the leadership of Prime Minister Salam Fayyad , the former World Bank economist who has unleashed a real Palestinian “revolution.” It is a revolution based on building Palestinian capacity and institutions not just resisting Israeli occupation, on the theory that if the Palestinians can build a real economy, a professional security force and an effective, transparent government bureaucracy it will eventually become impossible for Israel to deny the Palestinians a state in the West Bank and Arab neighborhoods of East Jerusalem.

“I have to admit, we, the private sector, have changed,” said Hulileh. “The mood used to be all the time to complain and say there is nothing we can do. And then the politicians were trying to create this atmosphere of resistance — resistance meant no development under occupation.”

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Fayyad and his boss, President Mahmoud Abbas , changed that. Now the mood, said Hulileh, is that improving the Palestinian economy “is what will enable you to resist and be steadfast. Fayyad said to us: ‘You, the business community, are not responsible for ending occupation. You are responsible for employing people and getting ready for the state. And that means you have to be part of the global world, to export and import, so when the state will come you will not have a garbage yard. You will be ready.’ ”

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