Prospects for a new and friendlier government after next week’s parliamentary elections has augmented demand for Solidere shares this week.
More than 147,000 Solidere A and B shares were traded on the Beirut Stock Exchange during the first two days of last week, following rumors that former Prime Minister Rafik Hariri, founder of Solidere, might lead Lebanon’s next government. The Daily Star reported that although prices of Solidere stock have risen this week, they still remain near the all-time low of $6 reached last November. The company’s A shares gained 3.7 percent to reach $7, while B shares jumped by 3.6 percent to $7.125.
According to Nabil Aoin, chairman of Fidus Brokerage, many investors are hoping for a government led by Najib Mikati, the current Minister of Transport and Public Works. Mikati has historically been supportive of Solidere.
Solidere has accused the current government of impeding the issuance of new permits to build projects in the Beirut Central District. According to investors, projects valued at more than $500 million have been delayed by the Beirut Municipality and the Urban Planning Department under the pretext that the developers’ maps were not consistent with their original plans.
Investment experts feel that either Hariri or Mikati would accelerate the issuance of permits to Solidere. Recently, banks and institutions have been the main buyers of Solidere, with the plan to eventually sell them to their clients. Many analysts feel that Solidere’s share price is currently undervalued and could rise above $10 next year.
Solidere’s A shares peaked at $14.75 in October 1997 and B shares reached $13.375 in December of the same year. In 1999, Solidere’s net profits fell by 93 percent to $3.7 million, from $54 million in 1998. -(Albawaba-MEBG)