Risk Aversion Among Traders Driven By Higher Rates By Fed and ECB

This week, the BLOM Stock Index (BSI) compiled by BLOMInvest Bank on a daily basis recorded a remarkable contraction of 6% to reach 1,226.300 on December 16, 2022. The market capitalization on the Beirut Stock Exchange (BSE) decreased weekly from $13.37B to $13.35B. The average volume and value of trades also totaled 137,892 shares worth $7,145,901 compared to 132,583 shares worth $2,155,150 last week.

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 99.90%, while the banking sector grasped the remaining of 0.10%, respectively. The most noteworthy trades throughout the mentioned period included:

• Solidere (A) shares added 1.75% to settle at $55.30/share
• Solidere (B) shares dropped by 0.46% to settle at $53.75/share
• BLOM shares dropped by 12.50% to settle at $2.66/share
• Audi GDR retreated by 7.14% to settle at $1.30/share

As for the BLOM Preferred Shares Index (BPSI), it remained constant at 41.01 by December 16, 2022.

In the Arab region, major Arab bourses recorded overall a worst performance this week. The S&P Pan Arab index slightly dropped by 0.69% whiles the MSCI index decreased by 0.93% compared to last week. Moreover, Bourse of Egypt, Tunisia, UAE and Saudi Arabia added 2.04%, 1.17%, 0.44%, and 0.43% respectively, by the end of this week. Meanwhile, the bourse of Qatar, Kuwait and Bahrain dropped by 4.46%, 1.73% and 0.08% respectively by the end of this week.

As for the US and European equity market, one key factor pouring risk aversion is the Fed’s announcement to raise interest rate by 50 bps this week. This has fueled fears of a deeper global economic downturn, as greater rates would slow global economic growth. As such, S&P 500 and NASDAQ, respectively, dropped by 1.71% and 2.45% on a weekly basis to stand at 3,895.75 and 10,810.53 by Friday December 16, 2022.

In the same token, equity market in Europe traded on a negative territory by the end of week. DAX registered a drop of 2.76% to stand at 13,915.29, whereas CAC 40 slightly fell by 3.15% to stand at 6,440.26. In the same token, the FTSE 100 declined by 1.94% from 7,463.08 to 7,318.58 by Friday, December 16, 2022, similarly to NIKKEI index which recorded a weekly downturn of 1.34% to end up the week at 27,527.12.