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Beirut stocks see slight drop as investors assess political crisis

18 January 2011

BEIRUT: Most stocks traded on the Beirut Stock Exchange witnessed a very slight decrease Monday as investors started to gradually react to the collapse of the Cabinet.

BLOM Stock Index went down 0.4 percent to 1488.25 points Monday compared to 1,494.29 points Friday.

Shares of real estate giant Solidere A and B closed at $18.77 and $18.93 percent respectively with a decrease of 0.94 percent in Solidere A and 0.31 percent in Solidere B. Trading value reached $1.07 million with a total of 100,392 shares traded through 101 transactions.

During the session six instruments were traded. Audi share prices rose while the prices of Solidere A, Solidere B, Bank of Beirut, Byblos Bank and BLOM bank shares saw a slight drop.

The Stock Capitalization of the listed companies fell by 0.37 percent to reach $12,736 million, against $12,783 million for the previous session.

“In general nothing has changed today compared to last week,” said Financial Analyst at Arab Finance Corporation Jean Tawyleh.

He said the Cabinet collapse prompted a lot of investors last week to sell their Solidere shares adding that when the Syrian- Saudi initiative first started, the prices of Solidere shares went up by 10 percent but then they went back down by 10 percent when the initiative failed to end the Lebanese political crisis.

Solidere A and B fell by 8.18 percent and 6.72 percent respectively Wednesday after the Cabinet collapse and the total number of shares traded reached 358,367, as nervous investors started to increasingly sell their shares.

Solidere shares slightly rebounded Friday and the total number of shares traded fell to 51,700. But Tawyleh said this slight rise in shares prices was not very significant because the number of shares traded was low.

He added that the volume of stocks traded on BSE has never been really huge because “we are limited to Lebanese investors.” He added that liquidity on the BSE is low, resulting in high volatility of stocks prices. “Any event whether good or bad will strongly affect the stock market whether downward or upward,” he added.

Meanwhile, bankers assured The Daily Star that there was neither a real rush on the U.S. dollar nor any major conversion of accounts from Lebanese pounds to dollars.

“Lebanese got used to political crises and we did not see any conversion of accounts from Lebanese pounds to dollars,” said executive general manager of Banque Misr Liban Hadi Naffi. “We also did not witness any changes in deposits inflows to the country.”

His views were echoed by the head of the research department at Bank Audi, Marwan Barakat, who said no massive conversions were witnessed during the past week. “I believe there is nothing to worry about because the Central Bank is sitting on $30 billion of foreign reserves and the country can weather any future crisis,” he said.

Barakat added that capital inflows and outflows were also not affected. He noted that out of foreign assets reserves, the central bank is capable of covering 80 percent of all Lebanese pounds in the market.

© Copyright The Daily Star 2011.