Lately there was a renewed interest about the relation between the inflation rate and stock returns (Azar, 2022). However, the case of Lebanon has not been considered and tested so far. This is the purpose of this note. It will check the theory on two share prices, BLOM Listed, which is a bank, and Solidere A, which is a real estate firm. They are two of the largest three listed companies on the Beirut Stock Exchange. The background theory is called the inflation irrelevance proposition and it posits that inflation, and more strongly foreign exchange rates, do not have a significant statistical relation with stock returns. The proposition follows from the notion that stock prices are the present values of future cash flows discounted at an appropriate discount rate. If the inflation rate is higher then, both the cash flows and the discount rate are upped leaving the present value the same. This is strongly true on average even if the market is imperfect, or taxes are distorting, or money illusion exists. Moreover, in addition for testing for inflation irrelevance, the note will include a discussion of financial market efficiency. Briefly, the irrelevance proposition robustly applies, and financial efficiency is roughly found, more strongly for the BLOM stock than for Solidere.
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