Lebanon's Solidere stocks fluctuate as Beirut bourse resumes trading after explosion

The largest listed company rebuilt Beirut's downtown area after the end of a 15-year civil war in 1990

People walk past a burnt truck, set ablaze by protesters during clashes the night before following a demonstration against a political leadership they blame for a monster explosion, in downtown Beirut on August 9, 2020.  / AFP / european afp / ANWAR AMRO
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Lebanon’s stocks fluctuated on Monday in the first trading session after last week's catastrophic Beirut port explosion, with the largest listed company Solidere gaining some ground before the close.

The Class A shares of the real estate developer, which fell as low as 11.6 per cent during the day, ended trading 0.49 per cent higher at $14.28. The company that rebuilt parts of the Lebanese capital after the end of a 15-year civil war in 1990, saw its Class B shares slump 1.17 per cent to $14.33.

The drop "is definitely related to the explosion and the uprising, [it is] reflective of the collective situation in Lebanon," Nabil Rantisi, general manager for wealth management at Dubai-based Daman Investments, said.

However, "it is not a very liquid market" and small volumes can affect prices, he added.

"It is only logical to see their stock declining," Mr Rantisi said, given that the company rebuilt downtown Beirut after the end of the last civil war and is now severely damaged by the port explosion.

"The volume is low and nobody is interested to sell or buy anyway, because people are on an another level … they have no homes. Some investors are not even looking at the market," the head of equities at a large Lebanese bank, said but declined to be named.

The August 4 explosion, blamed on 2,750 tonnes of ammonium nitrate in a port warehouse, has devastated almost half of the city, killing more than 150 people and wounding over 6,000. An estimated 90,000 homes were damaged and some 300,000 people are homeless.

The damage to the capital according to Beirut's Governor Marwan Abboud is estimated at about $15 billion (Dh55bn), though a precise assessment has yet to be made.

The devastation, Mr Rantisi said, raises questions about Solidere's future revenue.

"They still have tenants, but are they going to pay rents?" he said, adding that the earnings of Solidere are dependent on the country's economic situation at large and the impact of the bomb blast. The country's economy was projected to contract 12 per cent this year before the latest incident, according to the International Monetary Fund.

Solidere was the most actively-traded stock on the bourse. Investors have in recent months piled into Solidere, as the developer's stocks became a hedge for traders against the country's plunging currency and surging inflation as it endures its worst economic crisis in three decades.

The stock has risen 144 per cent since the start of October, when mass protests broke out in the country, compared with a drop of 24 per cent for the Blom Index, according to Bloomberg data.

Lebanon's bourse has a market capitalisation of about $5.4bn and is home to shares and global depository receipts of major Lebanese lenders including Bank Audi, Bank of Beirut, Byblos Bank and Blom Bank.

On Sunday, world leaders pledged almost $300 million to support the Lebanese people in efforts led by French President Emmanuel Macron and the United Nations.

Following the conference, the International Monetary Fund said it is ready to double down on efforts to help Lebanon handle the crisis, however it urged the political leadership to implement necessary reforms to unlock the needed assistance worth billions of dollars.