Rafik Hariri’s victory propels Market
Well it happened. Rafik Hariri and his allies swept to victory in Beirut in last week’s second and concluding round of the parliamentary elections. Solidere’s shares, as would be expected, got caught-up on the wave of optimism that greeted the results, helping boost the BLOM Stock Index by almost ten percent to 676.5.Now, the horse-trading begins until the new parliament convenes on October 17.Given the Byzantine nature of local politics, there are no certain outcomes. Thus, the appointment of Rafik Hariri as prime minister is far from assured.
Whoever is appointed in the end faces an unenviable task. The magnitude of the problems to be surmounted is large indeed. As such, the complete backing of major political leaders, namely the president and the parliamentary speaker, will be essential for the incoming prime minister. The announcement by Moody’s that it is placing Lebanon’s domestic currency debt rating on review highlighted the need for urgent and comprehensive action on economic reform .In the absence of this, both the economy and markets may find any meaningful revival beyond their reach.
The only activity of note among locally listed banks was registered by BLC “C” and Byblos “C”. The former witnessed movement for the first time since March, moving-up 1.9 percent to $ 10 ahead of a general assembly in the coming days. Byblos “C” gained 5 percent, perhaps benefiting from the optimism surrounding the perceived likely return of Rafik Hariri as prime minister. Following the same fashion, BLOM and Audi GDRs raised 3.8 percent and 2.2 percent respectively.
Solidere had what some investors hope was the first in a series of glorious weeks, with prices of both shares reaching levels not witnessed since June. While the official nomination for prime minister will not take place before the second-half of October, investors hope for a new Hariri-led cabinet that will help boost Lebanon’s biggest company. At the very least, they would expect a removal of many of the obstructions placed by the outgoing government in the way of new developments.
The prices of both share classes registered big gains this week, 12.25 percent for “A”, to close at $8, and 15 percent for “B”, to close at $8.625. Investors’ attraction to the “B” share, despite both classes having exactly the same rights attached to them, resulted in demand levels for the share in the range of 270,000 daily. The “A” share, however, was not able to sustain an excess of demand beyond mid-week, with supply gaining ground during the last 2 days. This resulted in the spread between the two share classes widening again to 7.8 percent. On the international front, things were not much different, as Solidere’s GDR gained 13.7 percent over the week to close at $7.7.
Ciments Libanais was the subject of some heavy trading, with volume totaling 360,000,or 46.2 percent of total bourse turnover. The only other trade was 2,000 Ciments Blancs “B” shares changing hands. – ( a target= ‘_new’ href=http://www.blom.com.lb>Banque du Liban et d’Outre-Mer)