The BLOM Stock Index Inched Up for the First Time since end-December: A Statement that Promises “an Action Plan & Softer Capital Controls “

The beginning of 2020 carried a lot of negative news for Lebanon which further dragged down sovereign macroeconomic parameters. In parallel, stock market activity on the Beirut Stock Exchange (BSE) also stalled overall, with listed real estate stocks trading the most and acting as investors’ “safe haven”.

However, the week ending January 31st broke the monotone pessimism when a series of statements were made by the Troika of the Ministerial Committee, the Association of Banks (ABL) and the Central Bank (BDL) on January 30th. In short, Circulars by ABL and the BDL are expected next week especially on harmonizing banking measures. Moreover, the goodwill expressed on behalf of the three entities this week allowed room to: finalize drafting the cabinet’s immediate priorities; call to formalize and unify banks’ measures; reassure citizens of an action plan – all effective and detailed next week.

Against this backdrop, the BLOM Stock Index (BSI) this week added 0.57% to close at 704.29 points on January 31st 2020. In turn, the Market capitalization on the BSE increased by a weekly 0.6% to reach $6.88B this week. However, the Average traded volume and value both fell going from last week’s 135,130 shares worth $977,254 to 38,701 shares worth $329,459 over the same period.

In comparison, the regional indices recorded down ticks across the board, with the MSCI Emerging Markets Index, S&P AFE 40 and the S&P Pan Arab Composite Large Mid Cap Index retreating by weekly 4.16%, 1.6% and 1.54%, respectively. This may be mostly linked to Trump unveiling the “Deal of the Century” this week, claiming it will bring peace between Israelis and Palestinians in the Middle East, but hardly welcomed in the region. 

On a regional level, the bourses with the better performance over the week were: Tunisia’s and Egypt’s which rose by 1.12% and 1.21%, respectively. However, the week’s stock markets recording the sharpest declines were those of: Qatar, KSA, Abu Dhabi’s and Dubai’s, losing weekly 2.23%, 2.15%, 1.49% and 2.05%, respectively.

In turn, the BSE continued to witness rigorous activity in real estate, but the banking sector also began to pick up. While the former grasped 74.88% of the total trading value this week, banks grasped the remaining 25.12% of the total.

In the real estate sector, Solidere “B” shares fell by 2.52% over the week to $8.5 while Solidere “A” shares rose by a weekly 2.41% to stand at $8.51.

The most eminent price declines recorded among Banks’ traded shares over the week were:

  • Blom GDR by 7.12% to $3.00
  • Audi GDR by 2.83% to $2.06

As for the shares with leading upticks on the BSE this week, we note:

  • Audi listed shares, up by 8.47% to $2.05

On the London Stock Exchange, BLOM Bank’s GDR shares added 2.46% to end the week at $2.50 while Audi Bank’s GDR shares slipped by 6.67% to $1.40

In turn, the BLOM Preferred Shares Index (BPSI) dipped by a weekly 0.97% to 74.67 points by Jan. 31st. The down tick is actually attributed to the 4.92% decline in the price of Byblos Preferred Shares 2009 to $59.9.

The performance of Lebanon’s trading activity on the BSE is tightly linked to the political and more recently, the economic promises to find a solution to the country’s debilitating finances. This explains the shy uptick in the BSI this week; however, the performance in the coming weeks will largely depend on the implementation of the Cabinet’s draft action plan entailing prime national priorities, as well as the internal commitment towards unifying banks’ measures and the awaited endorsement of the international community to the announced plans – all effective and under scrutiny over the next week.

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