A week marked by the government announcing and swiftly implementing sweeping tariff cuts designed to boost trade and help reduce manufacturers’ costs was little distinguished by activity on the bourse. The government’s steps were generally widely welcomed as part of its bid to promote economic growth. A pick-up in market activity will naturally take a little time to discern as investor confidence is built-up gradually and signs of the fruits of the administration’s labors are seen.
The BLOM Stock index was barely changed over the week, at 595.45, as a drop in Byblos “C” was offset by a rise in Solidere “B”. The approaching holiday season at the end of December will be providing sufficient diversions to act as a dampener on activity. Lebanese GDRs again slipped back, with foreign investor perception of Middle East equities perhaps clouded somewhat by regional events.
Again three banks were traded on the bourse this week, but with the difference that Audi “C” was replaced by a more vibrant BEMO “C”, which injected 31,746 shares in a single shot in continuous trading. This renewed spurt of activity helped boost BEMO 3.57 percent to close at $3.625.
Byblos “C” stumbled again, falling 7.14 percent to $1.625 on volume totaling 4,734 shares.
Bank of Beirut retained its active pace, trading 9,006 shares at an unchanged price of $7.563. On the international scene, all GDRs lost ground, with BLOM stepping back 0.35 percent to $21.35, while Audi and BLC shed 0.31 percent and 0.7 percent to.
The steady improvement in the fortunes of the Lebanese pound continued, with interbank trading ranging between LP1,511-12 by the close compared to LP1,511.5-12.5 a week before. The government’s new tariff cuts were well received, providing a degree of confidence for investors holding local currency assets. Some commercial demand for dollars, though, should be witnessed later in the month as merchants increase stocks for Christmas and Adha.
At the November 23rd auction, a relatively slight increase in purchase activity was witnessed with investors perhaps feeling more at ease with the new government. Previously, the BDL had entered the market itself when investor interest had started to wane. Purchase subscriptions of TBs and maturing bills rose in harmony by around 5 percent to LP507.49 billion ($336.64 million) and LP397.70 billion ($263.81 million) respectively.
A complete rebalancing of portfolios took place this week as the weight of the 24-M TB in weekly subscriptions lost more than 16 percent to stabilize at 38.13 percent, while that of the 12-M TB gained 1 percentage point to end at 18.94 percent. The short-term 3-M and 6-M TBs benefited from the reshuffled subscription pattern, seeing their share of total subscriptions rise to 42.93 percent from 27.54 percent on November 16th. The Central Bank sold LP12 billion ($7.96 million) worth of 45-day certificate of deposits on December 1st. — ( Banque du Liban et d'Outre-Mer Sal )
© 2000 Mena Report (www.menareport.com)