BSE Down this Week, amid Circular 161

This week, the BLOM Stock Index (BSI) compiled by BLOMInvest Bank on a daily basis decreased by 2.46% reaching 979.186 on January 14, 2022. The Market capitalization on the Beirut Stock Exchange (BSE) witnessed a decrease from $10.28B to $10.03B. The average volume and value of trades also totaled 22,244 shares worth $587,851 compared to 18,658 shares worth $160,122 last week.

Regionally, the major Arab markets witnessed a better performance this week. The S&P AFE 40 and the S&P Pan Arab increased weekly by 4%, and 4.42%, respectively. Meanwhile, MSCI increased by 3.80% compared to last week. Moreover, in the Arab World, the bourse of Qatar, KSA and Kuwait were the top gainers this week, and witnessed an increase by 3%, 5.67%, and 4.60%, respectively.

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 98.75%, while banking sector grasped the rest with stakes of 1.25%, respectively. The most noteworthy trades throughout the mentioned period included:

• Solidere (A) shares retreated by 3.32% to $30.57/share
• Solidere (B) shares decreased by 1.57% to $30.70/share
• Audi shares slumped d by 9.57% to $1.90/share
• Audi (GDR) increased by 6.15% to $1.90/share

As for the BLOM Preferred Shares Index (BPSI), it remains the same at 44.99 by the end of this week.

This week, BDL issued a new circular (161) that allow banks to sell dollars provided by BDL at the “Sayrafa” exchange rate (24,700) that is less than the black market rate (30,000 approximately). To understand the effect of this circular on the BSE we have to observe the evolution of Solidere shares price, because it’s the only stock that is high in volumes compared to other stocks on the BSE. As we can see, that Solidere price has decreased this week, as we believe that there is negative correlation between this stock and the exchange rate. The circular 161 has appreciated the Lebanese lira against the dollar due to massive sales of fresh dollars on the black market in order to benefit from the gap between the black market and the Sayrafa rate, which led to a decrease in Solidere stock price.  We will explore this relationship in more details in a future spotlight.