BLOM Stock Index (BSI)
Weighted effective yield of eurobonds
Equity update
The slump in global equity markets, along with the new issue of $1.2 billion of Lebanese Sovereign debt on July 28, steered investor interest towards the Lebanese Eurobond market. Hence, the BLOM Stock Index (BSI) hovered between a lower level of 1,301 points and an upper level of 1,343 points between July 15 and August 12, 2011, before closing near its lowest level of 1,305 points. During the aforementioned period, the BSI shed 1.1 percent, further lowering its year-to-date performance to a negative 11.5 percent. As for the activity on the Beirut Stock Exchange (BSE), it improved over the same period, as the daily average volume per month reached 153,424 shares, valued at $1.74 million, compared to 120,568 shares worth $1.56 million over the preceding four weeks between June 17 and July 15.
On a comparative scale, the BSI managed to outperform the S&P Pan Arab Composite LargeMidCap Index and the Morgan Stanley Emerging Index (MSCI), which were largely affected by concerns of a double-dip recession in the United States and continuing fears over a potential downgrade of French debt following S&P’s downgrade of the US Sovereign. The former lost 15 percent to settle at 107, while the latter fell 12.8 percent to 989.
With respect to the real estate sector, it dominated the four-week period of trades on the BSE, accounting for around 62.5 percent of the total value traded. Solidere stocks Class A and B rallied during the first week, adding 6.6 percent each, breaching its resistance level of $17, before reversing the trend throughout the next three weeks. Nevertheless, Solidere A and B managed to end the four-week period on a positive note, closing at $16.7 each on August 12.
On the other hand, despite the robust first-half financial results, most traded banking stocks ended on a negative note. BLOM stocks, GDR and listed, lost 1.5 percent and 5.08 percent, respectively, to close at $8.55 and $8.03. With respect to Audi Bank, its GDR and listed stocks fell as well by a respective 2.2 percent and 1.3 percent to settle at $7.19 and $6.88. Bank of Beirut followed suit as its listed stock declined 0.52 percent to $19, and its preferred Class E stock decreased 0.58 percent to $25.60. BEMO stock also ended in the red at $2.74, 0.72 percent lower than its previous close on July 15. As for Byblos Bank, its common stock fell 4.6 percent to $1.66, while its preferred stocks 2008 and 2009 rose 0.4 percent and 0.5 percent, respectively, to align at $100.5.
In the industrial sector, cement manufacturer, Holcim, saw its stock surge by 3% to 16.49, while Ciment Blancs B fell 3.3% to $2.97, its lowest level since mid-June.
Eurobond bulletin
The Eurobond market maintained its upward trend between July 15 and August 12, as investors’ appetites were lifted by the successful issuance (four times oversubscribed) of a $1.2 billion double tranche bond that was lead managed by BLOMINVEST Bank and Citigroup. Hence, the BLOM Bond Index (BBI) added 0.38 percent to settle at 110.9. Accordingly, the portfolio-weighted yield fell by 9 basis points (bps) to 4.91 percent, while the spread against the US benchmark yield widened 37bps to 411bps as investor demand for US Treasury Bonds increased following the plunge in global equity markets. Lebanon’s credit default swap (CDS) for 5 years increased to 361-391 bps, compared to 340-367 bps on July 15. In regional markets, Dubai and Saudi Arabia CDS were quoted at 350-365 bps and 105-111 bps, respectively.
