Chaos on the Market after Multiple Juridical Decisions against the Banks

This week, the BLOM Stock Index (BSI) compiled by BLOMInvest Bank on a daily basis decreased by 1.12% to reach 959.177 on March 18, 2022. The Market capitalization on the Beirut Stock Exchange (BSE) decreased weekly from $9.84B to $9.83B. The average volume and value of trades also totaled 73,215 shares worth $1,430,440 compared to 68,006 shares worth $633,186 last week.

This week, the banking sector was on edge after a juridical decision to close Fransabank branches. This juridical decision may be only the beginning, and may be followed by other similar decisions in the upcoming weeks against the banking sector due to massive lawsuits against them. Of course, putting the depositors in confrontation with the banks is hurting the economy, while the Lebanese parliament should play its role by legislate the capital control as soon as possible in order to stop the chaos. Everyone should bear responsibility, including BDL, the banking sector and the political parties; after all an economy without a healthy banking sector cannot survive.

Regionally, Arab markets recorded an average performance this week, amid the decrease of price of oil.  In details, the S&P Pan Arab, MSCI index increased by 0.28% and 1.65%, respectively, while S&P Pan Arab slightly decreased by 0.03%. Moreover, the bourse in Egypt and KSA recorded an increase this week of 2.34% and 1.30% reflecting the positive outlook for the economy, while the bourse of Kuwait decreased by 1.54%.

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 90.17%, while banking sector grasped 9.80% and industrial sector gripped the rest with stakes of 0.55%. The most noteworthy trades throughout the mentioned period included:

• Solidere (A) shares decreased by 1.21% to $31.12/share
• Solidere (B) shares increased by 0.26% to $31/share
• Audi (GDR) decreased by 1.57% to $1.87/share
• Audi Listed regressed by 6.35% to $1.77/share
• Ciment Blancs CB decreased by 4.17% to $5.57/share

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

The end of this week witnessed a devaluation of Lebanese lira against the dollar, and recorded LBP/USD 23,500 by the end of Friday 18, 2022. The depreciation of the national currency has historically been good to the stock market, especially Solidere stock, though it is harmful to the economy as a whole. Also, the upheavals now undergoing in the banking sector has hurt bank stocks, so it is interesting to see if positive future development in the banking sector can reverse the effect on bank stocks.