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Lebanese capital markets

by BLOM Bank
The healthy financial results released by top Lebanese banks at the end of January 2012 offset investors’ worries over the regional security situation and its implications on Lebanon. Hence, the BLOM Stock index (BSI), Lebanon’s equity gauge, moved in whipsaws between a lower band of 1,163 and its highest band of 1,184 points before ending the five-week period in green. The BSI rose 1 percent to settle at 1,183 points, widening its year-to-date performance to 0.57 percent.

 Trading activity on the Beirut Stock Exchange (BSE) was subdued between January 16 and February 17, as the daily average volume of trades per month decreased to 196,470 shares worth $1.45 million, as opposed to 237,574 stocks valued $1.42 million recorded in the preceding four-week period. On a regional comparative scale, the Lebanese equity benchmark index underperformed the S&P Pan Arab Composite Large Mid Cap index that rose 5.7 percent from its previous close on January 13. Moreover, the BSI failed to outperform the MSCI Emerging market index that grew 5.8 percent to 1,049 points. 

With respect to stock activity, the financial sector grasped the lion’s share of trades on the BSE accounting for 71 percent of the total value traded while real estate stocks represented the remaining 29 percent. The BLOM Bank GDR stock rallied during the past five-week period, rising 5.2 percent to $7.68. On the other hand, Audi stocks witnessed a mixed performance as its GDR and listed stocks advanced by a respective 6.5 percent and 5.2 percent to $6.35 and $6.01, while its preferred stock class “E” slightly fell by 0.1 percent to $100.4. Byblos stocks closed all in green; its common stock advanced by 1.86 percent to a two-week high of $1.64 whereas its preferred stocks 2008 and 2009 rose by 0.49 percent each to align at $102. It is worth highlighting that the top three banks in Lebanon, Audi, BLOM and Byblos, reported a respective net profit of $364 million, $331 million and $179 million for the year 2011. 

On the other side, Bank of Beirut and BEMO common stocks retreated by 0.52 percent and 6.4 percent to settle at $19.3 and $2.2 respectively. BLC Bank listed during last week of January 400,000 new Class A preferred shares and 550,000 Class B preferred shares on the BSE.

Lebanese Eurobond prices remained high and stable with limited offers during the past five weeks as investors waited for the new possible swap for the bonds maturing in 2012. The BLOM Bond Index (BBI) remained almost flat, adding a slight 0.1% from its previous close on January 13 to hit a level of 111.1 points. This cut the portfolio’s weighted effective yield by 8 basis points (bps) to 4.70% and the spread against the US benchmark yield by 11bps to 396bps. Five-year issues of Lebanon’s credit default swaps (a proxy for a country’s default risk) stood at 480-500bps compared to 465-495bps on January 13. On a comparative scale, Saudi Arabia and Dubai credit default swaps reached 132-141bps and 398-411bps respectively.
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