Students scuffled with riot police on Tuesday as hundreds gathered in front of the American University of Beirut to protest against a rise in tuition fees against the backdrop of a depreciating national currency.
Police dispersed protesters as they tried to storm the university’s campus in the second large demonstration of its kind this month.
Students organised a Day of Anger on December 20 after AUB, one of the country’s most prestigious universities, changed the exchange rate for tuition fees from the official rate of 1,500 lira to 3,900 lira a dollar – effectively multiplying future fees by 2.6.
While the government officially maintains the 1,500 exchange rate, banks limited withdrawals of dollars and new US currency is trading at much higher rates on the black market.
The lira has lost 80 per cent of its value since the country's worst economic and financial crisis unravelled late last year with the World Bank warning that more than half the country's population would plunge into poverty by 2021.
The university’s president, Fadlo Khuri, said the increase was necessary for the “financial survival of AUB” but student representatives said that it will deny many the right to education.
The university faces bankruptcy, the president said. In July, AUB fired 850 staff and Mr Khuri said entire departments could be mothballed with at least 25 per cent of the 6,000 staff unless the institution is able to plug the financial gap.
The university’s revenue for 2020-2021 will be 60 per cent below its target of $249 million.
Also in June, the US announced a $20 million package to support 1,800 students at AUB and the Lebanese American University.
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How to play the stock market recovery in 2021?
If you are looking to build your long-term wealth in 2021 and beyond, the stock market is still the best place to do it as equities powered on despite the pandemic.
Investing in individual stocks is not for everyone and most private investors should stick to mutual funds and ETFs, but there are some thrilling opportunities for those who understand the risks.
Peter Garnry, head of equity strategy at Saxo Bank, says the 20 best-performing US and European stocks have delivered an average return year-to-date of 148 per cent, measured in local currency terms.
Online marketplace Etsy was the best performer with a return of 330.6 per cent, followed by communications software company Sinch (315.4 per cent), online supermarket HelloFresh (232.8 per cent) and fuel cells specialist NEL (191.7 per cent).
Mr Garnry says digital companies benefited from the lockdown, while green energy firms flew as efforts to combat climate change were ramped up, helped in part by the European Union’s green deal.
Electric car company Tesla would be on the list if it had been part of the S&P 500 Index, but it only joined on December 21. “Tesla has become one of the most valuable companies in the world this year as demand for electric vehicles has grown dramatically,” Mr Garnry says.
By contrast, the 20 worst-performing European stocks fell 54 per cent on average, with European banks hit by the economic fallout from the pandemic, while cruise liners and airline stocks suffered due to travel restrictions.
As demand for energy fell, the oil and gas industry had a tough year, too.
Mr Garnry says the biggest story this year was the “absolute crunch” in so-called value stocks, companies that trade at low valuations compared to their earnings and growth potential.
He says they are “heavily tilted towards financials, miners, energy, utilities and industrials, which have all been hit hard by the Covid-19 pandemic”. “The last year saw these cheap stocks become cheaper and expensive stocks have become more expensive.”
This has triggered excited talk about the “great value rotation” but Mr Garnry remains sceptical. “We need to see a breakout of interest rates combined with higher inflation before we join the crowd.”
Always remember that past performance is not a guarantee of future returns. Last year’s winners often turn out to be this year’s losers, and vice-versa.
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