Hopes and dreams of brokers and investors for an upbeat 2012 were replaced by disappointment during the first trading week of the year. Total shares traded reached 214,382 as average daily trading dropped by half to 71,461 shares compared to 143,480 shares in the final week of 2011.
“We were expecting a more active start of the year after the holidays, but so far it’s been disappointing,” said Carole Sassine, chief broker at Crédit Commercial et Foncier in an interview with The Daily Star.
Yet humble trading on the Beirut Stock Exchange was not completely unwelcome given the BLOM Stock Index still inched up 0.19 percent to close the week with a stable market capitalization of $10.29 billion. Class A shares of Solidere, the market’s heavyweight stock and only listed real estate developer, gained 2 percent to close at $14.67, while gains at Solidere B were more limited, at 0.3 percent and a closing price of $14.55.
Banking sector GDRs reversed the previous year’s trend to post solid growth of 6.2 percent at Bank Audi and 0.5 percent at BLOM Bank. However, banking stocks in general remained the market’s laggards with Byblos shares dropping 3.1 percent to $1.58 and Bank Audi shedding 1.9 percent to $5.7 in continued signs of investor fears over regional exposure and domestic market slowdown. “Investors are expressing concern over bank profitability in 2012 and negative rumors are affecting sentiment,” said Sassine.
After three years of record profits and asset growth, Lebanon’s biggest banks reported slower gains in profits, deposits, and loans during the first nine months of 2011, and investors fear that the worst is yet to come. The country’s three biggest lenders all have operations in crisis-hit Syria and Egypt, and despite assurances of limited provisioning at their foreign operations, banking investors continue to cast doubt over exposure estimates.
In particular, shares of Bank Audi fell 30 percent in 2011 and are the second worst performer so far this year. Byblos, on the other hand, fell the most after one small trade worth slightly over $11,000, and has shown strong price resilience in recent months. According to information obtained by The Daily Star, a block trade of over 1.3 percent of Byblos’s outstanding shares took place between two current large shareholders in November in a deal to be announced during the first quarter of 2012. Nevertheless, banks remain profitable and weak price performance may improve dividend yields for Lebanon’s dividend-minded investors, especially in the absence of any signs of lower dividends in the new year.
To Sassine, however, this does little to generate market activity, arguing that “price changes have a bigger effect on demand than dividends, and for domestic speculators to return to the market, we need to see some increased volatility.” “We have not turned the page yet, but are still with the same political and economic problems of last year. Still, we expect trading this year to be better than last year given the slow start earlier in 2011,” said Sassine.