NABLUS, West Bank — In a parlor thick with cigarette smoke and hope, three dozen Palestinian men sit glued to the oversized screen where their bets are playing out.
The cramped brokerage office, resembling a hushed version of an off-track betting hall, is one setting for the hottest trend in an otherwise ailing Palestinian economy: investing in the local stock market.
The tiny Nablus-based stock exchange, known as the Palestine Securities Exchange, has been around since 1997 but caught the imagination of ordinary Palestinians only during the last year.
The market's benchmark Al Quds index has more than quadrupled since January, breaking the symbolic 1,000 threshold for the first time Nov. 6 and briefly thrusting past 1,300 since then.
These days, merchants, taxi drivers and housewives with even modest savings are suddenly crowding offices like this one in downtown Nablus. Experts say the surge shows that Palestinians are starting to feel hopeful after five years of conflict, and that the 28 Palestinian companies listed on the exchange are seen as bargains.
Many Nablus investors have come to view stocks in these high-profile firms as their best option because of comparatively low interest rates offered by banks and because so many other industries have atrophied in the face of Israeli-imposed travel restrictions and periodic street combat here.
The result seems incongruous: a stock market that has soared while most Palestinian commerce wilts, unemployment remains high and nearly half the residents live in poverty.
"Because of the intifada, there is no trade going on. The market is really dead. So we look for an alternative to make a living," investor Samer Malhis said.
On a recent morning, Malhis tracked a pair of his stocks, an industrial-investment company and the Palestinian electric utility, as share prices crawled across a television monitor at Global Securities Co., among the largest of seven authorized brokerages in the West Bank.
Malhis, 40, said his business supplying leather for shoe factories had withered since the outbreak of fighting five years ago, which was fierce in Nablus. Instead of pouring money into his livelihood, Malhis has invested $10,000 in Palestinian stocks. Now he spends most mornings at the brokerage -- there is no trading floor at the exchange -- to see how his stock choices are faring. He figures he made about $3,000 last year.
"If my business was any good, I wouldn't come here," Malhis said.
In the first 10 months of this year, about 13,000 new investors joined in, representing a third of the 34,000 stock accounts opened since the securities exchange was inaugurated in February 1997.
The market's general manager, Hasan Yassin, said the upward trend started in late 2004 with favorable earnings reports and accelerated after the death of Palestinian Authority President Yasser Arafat that November and the election in January of Mahmoud Abbas, a relative moderate, as his successor.
Political changes, including the new leadership and Israel's withdrawal from the Gaza Strip, and a noticeable drop in violence during recent months have increased optimism among Palestinians, Yassin said. But Israeli military roadblocks and sporadic incursions continue, and armed Palestinian gangs have stoked unease on the streets of Nablus.
"The political situation is better. I am optimistic about the future. But still, we have a country with many political problems," Yassin said.
The market's rise has been fueled in part by a flood of investments in Palestinian industries from elsewhere in the Arab world, especially Persian Gulf countries rich with oil profits. But Yassin said the biggest reason for the surge is strong performance by key Palestinian companies, including Palestine Development & Investment Co., a giant holding company, and Palestine Telecommunications Co., the telephone monopoly.
Some of the companies are thriving by putting money into needed infrastructure in the West Bank and Gaza Strip, others through investment abroad.
"These companies have found a way to get out of the very bad conditions of the West Bank," said Mohammed Salameh, executive director of Global Securities. Salameh said the intifada had hurt share prices, which tumbled during the worst of the back-and-forth violence. The market, which halted trading for more than 100 days in 2002 because of fighting and curfews, appeared close to collapse before flickering back to life last year.
"Things began to move, first by the locals who recognized low prices for the companies," Salameh said.
Since then, demand for shares in the listed companies has pushed the market steadily upward. Late last month, market capitalization reached $5 billion -- nearly five times higher than a year earlier but still minuscule compared with stock markets in neighboring Arab countries and Israel.