|Solidere leads post-election market surge
|Shares hit highest levels in seven years
Promises of economic aid to Lebanon, increasing investment confidence and the landslide victory of the son of late Prime Minister Rafik Hariri in the parliamentary elections have lifted the prices of Solidere shares to more than $13 for the first time in seven years.
Prices of Solidere A and B shares closed at $13.49 and $13.40 respectively yesterday, an average increase of 6 percent.
The giant real estate company saw its shares plunge by 30 percent in the first two days after the assassination of Hariri but prices quickly picked up due to large demands from Lebanese and Arab investors.
"We were expecting shares of Solidere to increase to these levels but not that soon," said Faysal Baribir, an investment advisor to the Arab Finance Corporation.
He added that investors apparently were encouraged by the elections results which gave the 35-year-old Saad Hariri the majority of seats in the Lebanese Parliament.
"Solidere was also doing very well in terms of property sales and rents in the first five months of this year despite the assassination of the former prime minister on February 14," Baribir said.
He added that in addition to Solidere shares, stocks of BLOM Bank, Banque Audi and Bank of Beirut all went up, reflecting a positive mood in the local market.
Blom Stock Index for Beirut Stock Exchange increased by 4.67 percent to 945.24 points.
Solidere represents more than 57 percent of the total trading in the BSE and the rest is divided among 13 remaining banks and companies.
Solidere chairman Nasser Chamaa said earlier that sales of properties in the first five months of 2005 exceeded all the sales in 2004.
Chamaa told Solidere's general assembly that the company netted more than $170 million in property sales in the first few months of 2005, expressing confidence that his firm will be able to write off all its debts in less than two years if business remains solid.
The company's profits in 2004 reached $54.1 million in 2004 and officials believe that the net income may be higher in 2005 if sales and rents remain high.
Saad, who successfully ran his father's $5 billion business empire worldwide, forged an alliance with many Christian and Muslim groups to strengthen his grip on the Parliament.
Sources believe that Saad has a good chance of becoming the next prime minister although he may be reluctant to cooperate with President Emile Lahoud, an arch opponent of his late father.
"The other factor which helped boost trading in Beirut Stock Exchange was the promises of economic assistance by the West to Lebanon if the government presents political and financial reforms," one banker said.
He added that he was not surprised by the recent jump in prices because the assets of the firms and banks traded on the BSE were undervalued.
"Lebanon has survived the assassination of Hariri and the country has been long overdue for correction."
The banker stressed that Lebanon still needs to tackle the public debt, now estimated at more than $35 billion, and implement reforms.
Some analysts say that Lebanon still needs to pass several tests such as the implementation of UN Security Council Resolution 1559 and solve the intricate issue of the presidency in the wake of increasing calls for Lahoud to step down.
The Daily Star