BLOM Stock Index ended the week down

Published October 3rd, 2000 - 02:00 GMT

Although the BLOM Stock Index ended the week 1.85 percent down, at 629.49, it had actually touched lower depths during the week, hitting an intra-week low of 615.58 on Wednesday. Both the downward journey and the limited rebound were attributable to the usual culprit, Solidere A recovery of sorts by the “A” share of Lebanon’s largest company possibly suggests that investors view the chances of a Hariri comeback as prime minister are now better than evens. Nevertheless, the market would still look to be reassured on future economic policy by whomever heads the new government, and as such would expect to have an economic agenda clearly spelt out by the next prime minister. Lebanese GDRs were mainly down, indicating international investors’ inclination to be underweight on Lebanon under present political and economic circumstances. 

 

BEMO, a new entrant to the active banks club, was the sole mover among bank stocks as its price rose 3.8 percent to $3.375 on trade of 15,593 shares. Bank of Beirut “C” was the only other stock traded, as 5,265 shares changed hands at an unchanged price. Internationally Audi’s GDR lost 4.8 percent to close at $17.75 as the bank’s individual rating was downgraded by rating agency Fitch IBCA.BLOM GDR on the other hand, shed 4 percent to close at $23.15,although the price went as low as $22.85 on Thursday, but rebounded by the end of the week on rumored foreign buying. At a P/E just over 5, BLOM GDR is generally viewed as being clearly undervalued, particularly given the bank’s ability to continue generating strong profits growth. 

 

By recent standards, trading in Solidere was quite active this week, reaching 64,255 or 75.4 percent of total bourse turnover. More than 99 percent of this volume was accounted for by the “A” share, which couldn’t keep the price from shedding 3.22 percent to end the week at $7.5. Heavy supply pressure at the beginning of the week pushed the price down to $7.125, before bargain-hunters entered the market to lift it back to $7.5 by the close. Despite a continuous, though limited, stream of demand for the “B” share, a mere 300 shares were traded over the week. 

 

Not much development is expected on the Solidere front before a new prime minister is appointed and a cabinet formed, though it seems that the balance of opinion might be shifting towards Rafik Hariri, which would be perceived as being very positive for the company. On the international front, the standstill is not helping the company’s GDR, which fell below $7 for the first time since the beginning of September, reaching $6.725 on Wednesday, before edging up again to close at $7. – (Banque du Liban et d’Outre-Mer

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