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Bank Audi noted in its weekly report: “With increasing fears of an expansion of the war in the region, especially given the continuation of the conflict in the Red Sea and the inflaming of the Iran-Pakistan front, while southern Lebanon is witnessing an ongoing military escalation and the country is plunged into a flood of multiple crises.” Aspects and in anticipation of the launch of the electronic platform Bloomberg in the foreign exchange market, the Lebanese financial markets this week continued to experience stability in the dollar exchange rate of the parallel market, while the stock market continued its decline and Lebanese Eurobond prices remained at their lowest historical levels.
In detail, the dollar exchange rate in the parallel market continued to hover around 89,500 LBP. This week, the Bank of Lebanon’s liquid foreign exchange reserves remained relatively stable at the same level as at the end of 2023, amounting to $9.3 billion. At the level of the Eurobond market, government bond prices remained at their historic lows, reaching 5.875 cents per dollar along the yield curve on Friday, given the geopolitical risks in the region and the lack of political will of the Lebanese authorities to implement the urgent demands of the Fund Reforms. International currency. As for the stock market, the Beirut Stock Exchange continued to record price declines, as evidenced by the price index falling by 3.3% compared to the previous week’s closing price, while trading volume fell by 96% on a weekly basis to $3.4 million .
Markets
In the money market: The interest rate fell to 40% day by day this week, compared to 85% at the end of the previous week, while the cost of cash remained within 1% amid widespread dollarization and stability of the dollar rate on the black market. The latest monetary statistics from the Bank of Lebanon for the week ending January 4, 2024 showed that resident bank deposits fell by 5,034 billion pounds. This decline is mainly due to a decline in foreign currency-denominated bank deposits of 4,169 billion lira per week (equivalent to $278 million at the official exchange rate of 15,000 lira), while lira-denominated bank deposits fell by 865 billion lira this year Decrease in deposits. In view of 827 billion lira and a decrease in savings in lira of 38 billion lira. In this context, the money supply in the broader sense (M4) contracted by 5,503 billion lira per week, given the decrease in cash in circulation by 415 billion lira and the decrease in the portfolio of government bonds subscribed by the non-bank sector by 54 billion lira.
In the foreign exchange market: While preparations are underway for the launch of the “Bloomberg” electronic platform in the foreign exchange market, amid ongoing efforts to improve transparency and disclosure frameworks and eliminate exchange rate pluralism, the black market for foreign exchange trading remained witness one Stability of the exchange rate of the lira against the dollar near 89,500, while the foreign exchange reserves of the Bank of Lebanon since the end of July, d Bank of Lebanon. The latest semi-monthly budget of the Bank of Lebanon, ended on January 15, 2024, showed that the central bank’s liquid foreign reserves recorded a slight increase of $5 million in the first half of January, reaching about $9,326 million in mid-January Month. Accordingly, liquidity reserves in currencies have increased by $753 million since the end of July 2023, i.e. since the date on which the new leadership took over the leadership of the Bank of Lebanon. This comes against the background of the political decisions of the monetary authorities not to finance the state in particular with foreign currencies and to preserve the remaining foreign reserves, as well as the intervention of the Bank of Lebanon in the parallel market through money transfer companies. especially dollar buyers.
On the stock market: The Beirut Stock Exchange continued its downward trend for the third week in a row, as shown by the 3.3% decline in the price index. Of the eight stocks traded, the prices of six stocks fell, while the price of one stock rose and the price of one stock remained stable. Specifically, Solidere A’s share prices fell by 4.3% to $75.65 and Solidere B’s share prices fell by 2.3% to $78.15. Among bank stocks, the prices of Bank Audi’s common shares closed with a decline of 14.9% to $2.00. The price of BLOM Bank common shares fell 14.3% to $3.00. Bemo Bank common shares fell 4.0% to $1.20. On the other hand, Byblos Bank common share prices increased by 17.4% to $0.81. In industrial stocks, Holcim Lebanon prices fell 0.5% to $59.20. Trading volume fell 95.7% on a weekly basis to $3.4 million, with Solidere stocks accounting for 71.4% of trading volume, followed by bank stocks at 27.7% and industrial stocks at 0.9%.
Eurobonds market: Amid increasing fears of an expansion of war given recent military developments in the region and the ongoing escalation on the southern Lebanese border while the country suffers from an unprecedented institutional vacuum and difficult economic conditions, and given the failure of the Lebanese Authorities to implement the urgent and requested reforms. According to the International Monetary Fund, Lebanese Eurobond prices remained at their lowest historical levels, closing unchanged from year-end at 5.875 cents per dollar the previous week, knowing that they had reached 7.875 cents per dollar on the eve of the outbreak of the Israeli war.
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