Political factors dominated trading on the Beirut bourse this week, as rising expectations that Rafik Hariri would be appointed as the next prime minister helped boost Solidere shares. Although volume was down on the previous week, there was sufficient interest in the stock of Lebanon’s largest company to maintain at least a semblance of activity on the bourse. Investors willing to speculate on the identity of the next premier may get their fingers burnt if Hariri is not appointed or turns down the job. Newspaper reports at the end of the week suggested possible disagreements between Hariri and President Lahoud. The seriousness of the country’s economic ills and the public expectations of a Hariri premiership are such that any prime minister whose name is not Rafik Hariri may be viewed with even deeper skepticism than usual by the markets.
Byblos Bank was second in-line among traded banks to announce its nine-month results after BoB last week, revealing a 4.5 percent drop in profits over the same period in 1999.The bank’s “C” share dropped before the announcement but recovered some of the lost ground on Friday, ending the week down 3.5 percent. Activity in Bank of Beirut fell markedly from its normal 1,000 share daily trade, reaching as low as 15 on Wednesday and 100 at each of the next two sessions. BEMO was the sole mover among the banks, as its price went up 3.7 percent to $3.50 on a one-day trade of 8,000 shares. Internationally, bank GDRs fell back as foreign investors concentrate on Solidere as their primary exposure to the Lebanese market. Audi’s GDR dropped 0.5 percent to $16.13 and BLOM’s GDR shed 0.8 percent to close at $21.725.
The market shrugged off news of a first-half loss of $2.7million by Solidere to mark-up its “B” share, which rose 8.3 percent to $8.125,on the back of growing expectations of Rafik Hariri taking-up his old post as prime minister. The “A” share had also staged something of a rally, but it was rather short-lived as it went up to $7.75 from $7.5 before returning to its starting point. Being the so-called inspiration behind the establishment of Solidere, it is only natural to assume that should Hariri return to office he would do his utmost to remove obstacles placed by the previous government in the way of new developments in the downtown area. Foreign investors, to a limited extent, seemed to join in the optimism surrounding the stock as the company’s GDR gained 1.85 percent to reach $6.9.– (Banque du Liban et d’Outre-Mer)