The BLOM Stock Index recovered its foothold above the 600 mark for the first time since the start of July, as Solidere shares came back into favor amid renewed hope among some opportunistic investors that former Prime Minister Rafik Hariri will once again occupy that position following the parliamentary elections. However, such an assumption could be characterized as being much more of a gamble
than a foregone conclusion. Given elections that are widely viewed as displaying less than shining democratic credentials and are bereft of substance regarding actual issues, the current executive’s preparedness to use tools of state in the electoral process presents formidable barriers for opponents to overcome.
As far as the market is concerned, a returning Hoss government and the perception of it being a flag-bearer of inertia may not be positively received. News this week that the cabinet asked the finance minister to prepare a third draft of the 2001 budget as debt servicing costs were considered too high, an item that should be predicted with far greater accuracy than others, was less than inspiring. At the same
time, a return of government run along pre-December 1998 lines would hardly be welcomed either. What is certain, the character of the government must be changed for the country to successfully confront its economic failings whereby policy is driven by reason and rationale rather than by vested political interest.
Traders in bank stocks sat on the sidelines as nothing of note happened this week ahead of the first stage of the elections. All prices remained unchanged with the same weekly trading patterns. The unusual activity that characterized trade in BEMO shares over the past 2 weeks started losing momentum as volume dropped 69%to 17,873.The initial boost created by the obtaining of a license to operate in Syria’s free zone seems to be fading away. On the international market, BLOM’s GDR was the sole gainer, moving up
1.84%to $23.5,while Audi’s GDR remained unmoved and BLC’s lost 1.4%over the week to close at $7.
Optimism never quite seems to detach itself completely from Solidere. Just when the chips look down for the shares, they suddenly bounce-back. The Israeli withdrawal from the South in May triggered a similar recovery but that was predictably short-lived. Class “A” gained 5.7%to $7 and “B”5.5%to $7.25.However,the basis for this revival is no more fragile than it was in May. Rafik Hariri’s return as prime minister may well be a real possibility despite all the attempts to block such an eventuality, but it remains nothing more than that, a possibility. Certainly, a Hariri comeback would be expected to be positive for Lebanon’s largest company, in which he is a major shareholder. At the very least, the bureaucratic delays that have held-up development permits of numerous projects will likely be dealt with promptly and perceived government hostility ought to be cleared-up. Activity in industrials stocks was quite pronounced this week as SCL registered trade of 62,932 shares, followed by Uniceramic “C” with 5,000 and Ciments Blancs “B”with 4,306 shares, all at unchanged prices.– .( href=http://www.blom.com.lb>Banque du Liban et d’Outre-Mer)