Upbeat Trading of Real Estate Shares Drove their Prices Up: Investors Seek to Diversify Risk

The BLOM Stock Index (BSI) fell by 4.59% to close the week ending January 10th 2020 at 741.31 points, while the Market capitalization on the Beirut Stock Exchange (BSE) fell by a weekly 4.61% to $7.25B. Nevertheless, the Average traded volume and value stood at 186,485 shares worth $1.43M this week, up from last week’s anemic trading volume and value of 55,713 shares worth $708,449.

Comparing the performance of Lebanon’s BSI to some of the region’s leading equity indices reveals that each of the S&P Pan Arab Composite Large Mid Cap Index and the S&P AFE 40 slipped by a weekly 0.61% and 0.47%, respectively. In contrast, the MSCI Emerging Markets Index registered an uptick of 0.12% over the week ending January 10th.

On a regional level, most bourses underperformed this week such that only one top gainer emerged and that was the bourse of Morocco recording a weekly uptick of 0.32%. On the counterpart, the week’s biggest losers were the equity markets of: Tunisia, Egypt, the KSA and Bahrain as they respectively fell by 3.07%, 2.24%, 0.8% and 0.71% over the week.

It is worthy to note that the weakened performance of the Middle East equities overall can be mainly attributed to the US air strike that killed Iranian general Qassem Soleimani on Jan.03rd, heightening the tensions in these states and the USA, especially as investors anxiously await updates on Iran’s potential retaliation in the coming weeks.

On the Beirut Stock Exchange (BSE), the real estate sector yet again stole the spotlight on the BSE. Amid the persisting political and financial uncertainties in Lebanon, the appetite of big investors shifted towards real estate, largely to diversify risks on their portfolios and put their deposits to good use until the country is back on its feet. In fact, the sector constituted 98.34% of the total traded value on the BSE, with Solidere’s “A” and “B” shares combined grasping a total market value of $5.6M this week, compared to last week’s $825,326. In details, the Solidere A and B shares surged by weekly 23.64% and 24.44% to stand at $8.42 and $8.4, respectively, by the week ending Jan. 10th.

As for the industrial sector, it grasped a marginal 0.4% of total BSE’s trading value. The shares of HOLCIM rose by 2.56% to close the week at $10/share.

In its turn, the banking sector grabbed a marginal 1.26% stake of BSE’s total trading value this week as it witnessed a notably weak performance. This can be mostly tied to the growing public anger vis-a-vis commercial banks expressed over the week, noting banks had imposed capital controls since opening their doors post-October 2019’s protest eruption to prevent a run-on-banks and in an attempt to retain financial stability amid challenging conditions.

Interestingly, Bank Audi’s Listed and GDR shares both slumped this week by the respective 34.84% and 37.84%, to settle at $2.3 each by January 10th. On the counterpart, BEMO Listed shares jumped by a weekly 8.7% to reach $1.25, over the same period.

 By the same token, on the London Stock Exchange BLOM (GDR) shares added a weekly 0.92% to close at $2.2, while Audi GDR shares declined by 0.66% to $1.50 over the week.

 The BLOM Preferred Stock Index (BPSI) witnessed minimal trading activity this week and therefore remained stable at last week’s 75.18 points.

The trading activity on the BSE remains subdued, despite the growing demand on real estate, noting the latter is expected to grow over the short term. Nonetheless, the future trading activity will most probably be closely linked to the formation of a new, awaited and needed government that earns the consent of national and international communities.

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