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French Version

Beirut bourse reopens after war hiatus

Blom index slips 4.13 percent in 'reasonable' volume of trading

The Beirut Stock Exchange (BSE) resumed trading on Tuesday after a two-week closure due to the Israeli attacks on Lebanon.

"We can't say that the activity at the bourse was similar to previous days but the volume of trading in the first day opening after two weeks' stoppage was relatively reasonable," the chairman of the BSE, Fadi Khalaf, told The Daily Star.

According to the BSE, 60,270 shares changed hands with a total value of $952,529, with shares falling by up to 5 percent.

The BLOM Stock Index dropped 4.13 percent to close at 1,230.22.

The market capitalization of the BSE reached $5.7 billion.

To contain any foreseeable panic, the BSE adopted a series of measures before the official opening Tuesday.

One of the important temporary measures was reducing the fluctuations of prices, up or down, from 10 percent maximum in daily trading of shares to 5 percent.

Khalaf said this measure was meant to contain any possible panic in the market.

Brokers said that the BSE set a new ceiling for price fluctuations to ensure that big investors will not buy the stocks of small investors at very low rates.

"Investors who are buying stocks from the BSE realize that the current prices are very encouraging and they say it is time to buy," Khalaf said.

He reminded that shares of the giant real estate company Solidere fell by 30 percent in the first two days of trading following the assassination of former Prime Minister Rafik Hariri in February 2005.

"But these shares quickly picked up in the following days and the prices reached more than $20 per share," Khalaf said.

Solidere A and B shares fell to $16.53 on Tuesday trading, a drop of 5 percent.

"Investors know that Solidere shares are attached to the properties managed by the company and these prices will eventually pick up," Khalaf said.

Before the Israeli attacks, Solidere reported impressive land and property sales in the first six months of 2006 and officials projected the profits to exceed those of 2005.

Stocks of banks listed on the BSE also fell slightly.

"As far as banks are concerned, it has become public knowledge that banks assets and deposits continued to climb even during the darkest days of the previous wars," Khalaf said.

He added that the companies and banks listed on the BSE have a long tradition and there was no cause for a panic as in the case of companies that usually projects their profits or losses in other stock markets.

At present, only 11 companies and banks are listed on the BSE, which re-opened in 1996.

Apart from shares, some of the commercial banks have fixed-income funds in dollars and Lebanese pound denominations that are traded on the BSE.

But Khalaf declined to say how shares will perform in the coming days, noting that as long as the war is still going on then it would be difficult to project the levels of prices or volume of trading.

"However, judging by the performance in the first day, the volume and value of trading was reasonable," he said.

Khalaf said that Warren Buffet, the world's greatest stock market investor whose fortune is more than $44 billion, used to say that you can sleep comfortably if you would buy a stock of a company even if the bourse was closed for 10 years.

"This proverb also applies to the BSE because the values of the shares are not pinned to profit projections for the next 10 years, especially for start-up companies."

Khalaf said that the BSE will surely implement some plans to improve the performance of the bourse, adding that one of the immediate goals was to create remote trading.

"We hope to start the remote trading soon. This will allow brokers to buy or sell shares from the BSE from their offices and without the need to come here."

Khalaf said that the BSE plans to launch the online trading in the beginning of 2007.

Beirut 02-08-2006
Osama Habib
The Daily Star

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