Despite hopes for regained market momentum before the end of the year, Beirut Stock Exchange activity proved once again that the rule of financial law is not stronger than the politics ruling Lebanon’s market.
Volumes slowed almost 90 percent to 153,381 shares during the week ending Dec. 23, and the BLOM Stock Index fell 0.2 percent to 1,187.42 points with little hope for a comeback in the final days of a long year. “I think the market will be very slow and trading light next week because investors are busy with the holidays and stock dividends, namely those of Solidere, have already been cashed,” said Tarek Bassil, equities trader at Byblos Bank in an interview with The Daily Star.
Over half a million shares of Byblos were traded during the week in what appeared to be a continuation of the previous week’s multimillion share trading in the bank, and trading may resume in the coming week with 42,625 open buy orders and 58,128 sell orders. Bassil, however, said the heavy trading is not a reflection on the bank’s fundamentals given the minimal price fluctuation. “Those are typical results from the transfer of ownership, and the same recently happened with Bank Audi,” said Bassil.
Rumors about a U.S. lawsuit against three Lebanese banks for involvement in money laundering activities related to Hezbollah did not seem to gain much traction or generate higher trading volumes although banking stocks were the biggest losers of the week. Bank Audi GDR saw its shares fall 4.61 percent to $6, followed by Byblos, down 3.03 percent and back to its recent stable level of $1.6. BLOM Bank’s GDR fell 0.91 percent to $7.63, while Bank Audi’s listed shares dropped 0.85 percent to close the week at $5.8.
Low trading levels indicate that private investors took an early holiday this year and the typical portfolio rebalancing at funds and other institutional investors may likely have been put on hold in order to buy time through the holidays.
“The rebalancing will be offset by the uncertain political situation this year,” said Bassil.
Syria’s agreement to an Arab observer mission did little to assuage investor fears as the crisis in Syria continues to pose a drag on foreign investment sentiment in Lebanon.
“The market should follow the trend of regional and international markets which are rebounding lately, but Syria is somehow scaring foreign investors who do not see the limited economic impact on Lebanon or who typically view the region as one entity,” explained Bassil.
And the weakness in stock prices just before year-end was exacerbated by the acceleration in consumer price index figures released by the Central Administration of Statistics. The CPI rose 0.46 percent month-over-month in November to 117.6 points, up 3.04 percent in the first 11 months, with the fastest increase in prices reported in the food and nonalcoholic beverages category which rose 1.18 percent month-over-month, an annualized increase of 5.12 percent.
November also saw clothing and footwear prices inch up 0.8 percent and water, electricity, gas and other fuels rise 0.81 percent. On the other hand, both education and transportation were virtually flat for the month.
With Lebanese investors taking a beating from stock price performance and from accelerating inflation in 2011, the focus has shifted to the all-too-familiar, politically sensitive post-holiday rebound. “There is definitely an opportunity for a rebound in 2012 given low prices, but only if political situations in Lebanon and the region ease,” said Bassil.