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Beirut Stock Exchange witnesses another day of large transactions

02 April 2011

BEIRUT: Byblos and BLOM banks dominated the volume of trading Friday in an unusual spate of share selling over the past three days that has raised the attention of some analysts.

Financial experts and brokers interviewed by The Daily Star were unable to identify either the parties involved in these transactions or the motives behind the deals.

According to the Beirut Stock Exchange daily bulletin, the total value of Byblos Bank priority shares and BLOM Bank listed shares on Friday’s trading stood at $13.4 million and $12.9 million respectively. Byblos priority shares closed at $1.89, a drop of -0.52 percent while BLOM shares closed at $9.05, an increase of 0.55 percent.

The total value of all shares traded Friday reached more than $27 million and if this figure is added to Wednesday and Thursday’s results, the amount reaches $69 million, a significant figure given the fact that the average value of trading in the relatively dormant bourse did not exceed $2 million a day for the past six months.

But despite the significant rise in the total value of transactions, the BLOM stock index has fallen in recent days.

BLOM stock index fell 0.53 percent to 1412.75 points Friday.

Brokers dismissed the notion that these transactions indicate that foreign investors are exiting the Lebanese capital market. “Why do we assume that foreigners are selling their shares? Why don’t we assume otherwise? Lebanon is still in better shape than most of the Arab countries,” a capital market specialist told The Daily Star.

He added that even with the absence of a government, the business and investment climate in Lebanon is still far better than that of Arab states that are experiencing turmoil.

“This is good news, especially if we take into account the political stalemate and bickering among politicians. The most important thing about these transactions is that the prices did not change sharply,” the broker explained.

The size of shares held by Arab investors in listed companies and banks in the bourse is unclear, but experts say a foreigner can buy up to 5 percent of Solidere’s total shares and the same applies to Lebanese banks.

But if the total equities and shares on the Beirut Stock Exchange held by foreigners exceeds 30 percent of the ceiling, then this needs the approval of the regulatory authorities.

All of the brokers admit that fixed income instruments such as Eurobonds and treasury bills are more appealing to investors. “Some investors feel more comfortable collecting income from a fixed income instrument than investing in the stock of a Lebanese company,” one broker said. – The Daily Star

© Copyright The Daily Star 2011.