Solidere Stock Price Increased amid the Negative Correlation with the Exchange rate!

24/9/202117/9/2021% Change
BLOM Stock Index         981.204          946.7463.64%
Average Traded Volume         219,608          211,8903.64%
Average Traded Value      1,889,087       4,761,323-60.32%

Over the course of the past week: the BLOM Stock Index (BSI) compiled by BLOMInvest Bank on a daily basis increased by 3.64% reaching 981.204 on September 24, 2021. The Market capitalization on the Beirut Stock Exchange (BSE) increased from $9.70B last week to $10.05B. The average volume and value of trades also totaled 219,608 shares worth $1,889,087 compared to 211,890 shares worth $4,761,323 last week.

This week, the stock market has recorded a better performance, while the two biggest shares (Solidere A and Solidere B) listed on BSE have made a rebound compared to last week by recording a significant increase by 16.17% and 11.66%, respectively on its stock price. These fluctuations are mostly correlated negatively to exchange rate of Lebanese lire against the Dollar in the parallel market. As we can notice, when the Lebanese lira appreciate against the dollar the stock price of Solidere decrease and the opposite is true. This negative correlation between these two is explained by investors hedging the risk of devaluation of the national currency by going long on Solidere stock. However, when the national currency appreciates they take the short position to liquidate theirs assets.

Regionally, the major Arab markets witnessed a bad performance this week. In details, the S&P AFE 40 index, and S&P Pan Arab and MSCI decreased weekly by 0.99%, 1% and 0.33%, respectively. In the Arab World, the bourse of Morocco, and Qatar were the top gainer this week, and witnessed an increase, compared to last week, of 0.57%, and 0.53%, respectively. However, least gainers were Egypt, UAE, and Saudi Arabia with a drop each of 3.23%, 2.12%, and 1.33%.

On the Beirut Stock Exchange (BSE), the real estate sector grasped the lion’s share of the BSE’s trading value with a stake of 80.86%, while banking sector grasped the rest with a stake of 19.14%. The most noteworthy trades throughout the mentioned period included:

  • Solidere (A) shares rose by 16.17% to $29.45/share
  • Solidere (B) shares Increased by 11.66% to $29.02/share
  • Audi Listed Slumped by 13.21% to $2.30/share
  • BLOM Listed decreased by 9.28% to $3.52/share
  • Blom GDR increased by 12.39% to $3.90/share
  • Bemo Shares decreased by 4.55% to $1.05/share
  • Byblos Preferred 09 shares decreased by 1.02% to $37.99/share
  • Holcim shares increased by 0.06% to $18.03/share
  • Rymco shares increased by 2.90% to $3.19/share

As for the BLOM Preferred Shares Index (BPSI), it decreased by 0.16% to 44.99 by the end of this week.

This BSE witnessed a better performance this week compared to last week. It seems that BSE is used by investors to hedge against the risk of the devaluation of Lebanese lira. As we notice that when the national currency appreciates (like last week) the BSI drop and vice-versa, making the stock market a “trailing” indicator to the FX market.

 

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