THE LEBANON BRIEF - mofcom.gov.cnimages.mofcom.gov.cn/lb/201306/20130614153730421.pdf · The Lebanon Brief Page 5 of 14 ISSUE 823; Week of 03 -08 June 2013 SAL Foreign Exchange Market

Your Investment Reference

THE

LEBANON BRIEF

ISSUE 823

Week of 03 – 08 June, 2013

ECONOMIC RESEARCH DEPARTMENT

Rashid Karame Street, Verdun Area

P.O.Box 11-1540 Beirut, Lebanon

T (01) 747802 F (+961) 1 737414

[email protected]

www.blom.com.lb

S A L

The Lebanon Brief Table Of Contents Page 2 of 14

ISSUE 823; Week of 03 -08 June 2013

S A L

TABLE OF CONTENTSTABLE OF CONTENTSTABLE OF CONTENTSTABLE OF CONTENTS

FINANCIAL MARKETSFINANCIAL MARKETSFINANCIAL MARKETSFINANCIAL MARKETS 3333

Equity Market 3

Foreign Exchange Market 5

Money & Treasury Bills Market 5

Eurobond Market 6

ECONOMIC AND FINANCIAL NEWSECONOMIC AND FINANCIAL NEWSECONOMIC AND FINANCIAL NEWSECONOMIC AND FINANCIAL NEWS 7777

Lebanon’s Infrastructure Rating Stood at 46.08 in May 7

The Central Bank’s Assets Totaled $77.49B in May 7

Commercial Banks Consolidated Total Assets Grew to $155.11B In April 8

Airport Passengers at 2.40M up to May 9

Beirut Hotels Occupancy Rate Falls to 56% in the First Quarter 9

CORPORATE DEVELOPMENTSCORPORATE DEVELOPMENTSCORPORATE DEVELOPMENTSCORPORATE DEVELOPMENTS 10101010

BLOM Bank Financial Strength Rating (FSR) Affirmed at ”BBB-“ 10

Bank Audi Calls for an Extraordinary General Assembly 10

Solidere Calls for an Ordinary General Assembly 11

FOCUS IN BRIEFFOCUS IN BRIEFFOCUS IN BRIEFFOCUS IN BRIEF 12121212

Lebanon: Flying Along With the Ailing Flock 12

This report is published for information purposes only. The information herein has been compiled from, or based upon sources we believe to be

reliable, but we do not guarantee or accept responsibility for its completeness or accuracy. This document should not be construed as a

solicitation to take part in any investment, or as constituting any representation or warranty on our part. The consequences of any action taken

on the basis of information contained herein are solely the responsibility of the recipient.

The Lebanon Brief Page 3 of 14


S A L

FINANCIAL MARKETSFINANCIAL MARKETSFINANCIAL MARKETSFINANCIAL MARKETS

Equity Market

Stock Market

31/5/2013 24/5/2013 % Change

BLOM Stock Index* 1,182.00 1,186.64 -0.39%

Average Traded Volume 124,923 133,420 -6.37%

Average Traded Value 974,977 1,022,283 -4.63% *22 January 1996 = 1000

It was a relative slow week on the Beirut Stock

Exchange as investors maintained their weary

positions in the wake of further adverse political

developments originating from local security

clashes and regional turmoil. The average daily

traded volume reached 124,923 shares valued at

$0.98M compared to 133,420 shares worth $1.02M

recorded last week. Consequently, the BLOM Stock

Index (BSI) retreated 0.39% to close at 1,182.00

points with a year-to-date increase of 1.10%.With

respect to the market capitalization, it fell by a

weekly $48.53M to $9.18B.

On a comparative scale, the Lebanese benchmark

outperformed the MSCI Emerging index that fell

3.05% to 985.05 points. The Lebanese gauge failed

to beat the S&P AFE40 and the S&P Pan Arab

Composite LargeMidCap index that edged up by

0.27% and 1.25% to 58.73 points and 119.99

points, respectively.

On the regional scene, Saudi Arabia Stock Exchange

was the best performer this week increasing by a

weekly 2.83%. Dubai and Abu Dhabi bourses

followed with a weekly growth of 2.32% and 1.54%,

respectively. The Egyptian Stock Exchange was the

worst performer in the past week recording a 6.95%

weekly decline. Investors sold their stocks during

the week as concerns rose about the expected

protests on June 30, date when the president

started his mandate a year ago. The Kuwaiti bourse

underwent a week of profit taking and closed by the

end of the week losing 3.28%.

The banking sector took this week as well the

biggest share of the trading activity on the BSE,

grabbing 77.28% of the total value traded, whereas

the real estate stocks made up 22.01% and the

retail sector took the remaining 0.72%, as investors

are awaiting the 2012 financial results of Solidere

that will be published probably next week.

By Friday, almost all financial stocks closed in the

red. BLOM GDR and Listed dropped 0.56% and

0.72% to close at $8.80 and $8.25, respectively.

Audi and Byblos common shares also edged down

by 0.32% and 1.29% to close at $6.30 and $1.53,

respectively.

Banking Sector

Mkt 7/6/2013 31/5/2013 %Change

BLOM (GDR) BSE $8.80 $8.85 -0.56%

BLOM Listed BSE $8.25 $8.31 -0.72%

BLOM (GDR) LSE $8.89 $8.80 1.02%

Audi (GDR) BSE $6.83 $6.83 0.00%

Audi Listed BSE $6.30 $6.32 -0.32%

Audi (GDR) LSE $6.60 $6.80 -2.94%

Byblos (C) BSE $1.53 $1.55 -1.29%

Byblos (GDR) LSE $70.00 $70.00 0.00%

Bank of Beirut (C) BSE $19.00 $19.00 0.00%

BLC (C) BSE $1.95 $1.95 0.00%

Fransabank (B) OTC $28.00 $28.00 0.00%

BEMO (C) BSE $1.84 $1.84 0.00%

Mkt 7/6/2013 31/5/2013 % Change

Banks’ Preferred

Shares Index *

104.19 104.25 -0.06%

BEMO Preferred 2006 BSE $100.00 $100.00 0.00%

Audi Pref. E BSE $100.90 $101.00 -0.10%

Audi Pref. F BSE $100.20 $100.00 0.20%

Byblos Preferred 08 BSE $100.00 $100.00 0.00%

Byblos Preferred 09 BSE $100.50 $101.00 -0.50%

Bank of Beirut Pref. E BSE $25.50 $25.50 0.00%

Bank of Beirut Pref. I BSE $25.45 $25.40 0.20%

Bank of Beirut Pref. H BSE $25.40 $25.40 0.00%

BLOM Preferred 2011 BSE $10.12 $10.07 0.50%

* 25 August 2006 = 100

1050

1100

1150

1200

1250

Jun-12 Sep-12 Dec-12 Mar-13 Jun-13

BLOM Stock Index HI: 1,227.46

LO: 1104.42



S A L

Real Estate

Mkt 7/6/2013 31/5/2013 % Change

Solidere (A) BSE $12.38 $12.50 -0.96%

Solidere (B) BSE $12.31 $12.50 -1.52%

Solidere (GDR) LSE $12.15 $12.15 0.00%

As for the BLOM preferred shares index (BPSI), it

inched down by 0.06% to settle at 104.19 points.

The Preferred shares of BLOM class 11 and those

of Bank of Beirut class “I” gained 0.50% and

0.20% to close at $10.12 and $25.45,

respectively. The preferred shares of Audi class

“F” also increased by 0.20% to reach $100.20,

while the class “E” retreated by 0.10% to set at

$100.90. Byblos Preferred shares class 09 lost a

weekly 0.50% to close at $100.50.

Manufacturing Sector

Mkt 7/6/2013 31/5/2013 % Change

HOLCIM Liban BSE $15.35 $15.35 0.00%

Ciments Blancs (B) BSE $3.23 $3.23 0.00%

Ciments Blancs (N) BSE $3.24 $3.24 0.00%

On the London Stock Exchange (LSE), BLOM

GDR added a weekly 1.02% to reach $8.89, while

AUDI GDR declined by 2.94% to stand at $6.60.

In the real estate sector, both Solidere shares “A”

and “B” declined by a respective 0.96% and

1.52% to set at $12.38 and $12.31, respectively.

Funds

Mkt 7/6/2013 31/5/2013 % Change

BLOM Cedars Balanced

Fund Tranche “A” ----- $6,966.82 $7,009.57 -0.61%


Fund Tranche “B” ----- $5,075.44 $5,108.69 -0.65%


Fund Tranche “C” ----- $5,291.35 $5,323.81 -0.61%

BLOM Bond Fund ----- $9,738.32 $9,738.32 0.00%

In the retail sector, RYMCO shares exchanged

hands this week adding 15.13% to close at $3.50.

Finally, looking ahead at next week, Lebanese

bourse activity is expected to remain cautious

amid uncertainty as the security situation remains

tense domestically.

Retail Sector

Mkt 7/6/2013 31/5/2013 % Change

RYMCO BSE $3.50 $3.04 15.13%

ABC (New) OTC $33.00 $33.00 0.00%

Tourism Sector

Mkt 7/6/2013 31/5/2013 % Change

Casino Du Liban OTC $490.00 $490.00 0.00%

SGHL OTC $7.00 $7.00 0.00%



S A L

Foreign Exchange Market

Lebanese Forex Market

7/6/2013 31/5/2013 %Change

Dollar / LP 1512.50 1511.00 0.10%

Euro / LP 1994.57 1961.86 1.67%

Swiss Franc / LP 1620.79 1581.68 2.47%

Yen / LP 15.63 15.02 4.06%

Sterling / LP 2347.48 2295.62 2.26%

NEER Index** 113.55 113.60 -0.04% *Close of GMT 09:00+2 **Nominal Effective Exchange Rate; Base Year Jan 2006=100

**The unadjusted weighted average value of a country’s currency relative to all major

currencies being traded within a pool of currencies.

The weekly demand on the US dollar was more pronounced

compared to the past week as the range at which banks

exchanged the currency went from $/LP 1, 509 - $/LP 1,513

with a mid-price of $/LP 1,511 to $/LP 1,510.5 - $/LP 1,514.5

with a mid-price of $/LP 1, 512.5. Foreign assets (excluding

gold) at the Central Bank stood at $37.29B as of end April

2013, 5.5% more than end of March’s $35.33B. Meanwhile,

the dollarization rate of private sector deposits stood at

65.06% in April compared to 65.17% in March.

Nominal Effective Exchange Rate (NEER)

The euro advanced against the US Dollar, once again boosted

by the German economy. In fact, German industrial output

surged the most in over a year during April and the progression

of exports exceeded economists’ forecasts as trade with the

Asian fast-growing economies and the US will slowly pull the

17-nation euro area out of recession. In addition, the ECB

President Mario Draghi asserted that prospects of an

economic recovery are to be expected further in the year and

that the central bank shall maintain the interest rates

unchanged. By Friday June 7th, 2013, 12:30 pm Beirut time,

the euro closed at €/$ 1.32 up by 1.67% from last week. As for

the dollar-pegged LP, it depreciated to €/LP 1,994.57 from €/LP

1,961.86 recorded on Friday May 31st. The Nominal effective

exchange rate (NEER) slipped by 0.04% over the cited period

to 113.55 points, while its year-to-date performance stood at

9.38%.

Money & Treasury Bills Market

Money Market Rates

Treasury Yields

7/6/2013 31/5/2013 Change bps

3-M TB yield 4.39% 4.39% 0

6-M TB yield 4.87% 4.87% 0

12-M TB yield 5.08% 5.08% 0

24-M TB coupon 5.84% 5.84% 0

36-M TB coupon 6.50% 6.50% 0

60-M TB coupon 6.74% 6.74% 0

7/6/2013 31/5/2013 Change bps

Overnight Interbank 2.75 2.75 0

BDL 45-day CD 3.57 3.57 0

BDL 60-day CD 3.85 3.85 0

During the week ending May 23rd, broad Money M3 grew by

LP345B ($229M), to reach LP161,093B ($106.86B). M3’s

growth rate reached 6.96% on a year-on-year basis and

2.00% from end of December 2012. As for M1, it contracted

by LP2B ($1M) since currency in circulation decreased by

LP82B ($54.39M) and demand deposits increased by LP80B

($53.07M).Total deposits (excluding demand deposits)

registered a LPB347.34B ($230.41M) expansion, due to the

LP79B increase of term and saving deposits in LP and the

$178M rise in deposits denominated in foreign currencies.

During the period 16-23 May, the broad money dollarization

rate rose by 4 basis points to reach 58.67% compared to its

previous level of 58.63%. According to The Central Bank, the

overnight interbank rate stood at 2.75% by the end of April

2013.

In the TBs auction held on May 30th, the Ministry of Finance

raised LP718.86B ($476.85M) through the issuance of

Treasury Bills. The highest demand was witnessed on the 3Y

bill capturing 95% of total subscriptions, while the 1 and 2

year papers accounted for 4% and 1%, respectively. During

the auction, the average discount rate for the 1Y note stood

at 5.08% while the average coupon rate for the 2Y and 3Y

notes registered 5.84% and 6.50%. New subscriptions

exceeded maturing T-bills by LP57.79B ($38.33M).

99

101

103

105

107

109

111

113

115

117

Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13



S A L

Eurobond Market

Eurobonds Index and Yield 6/6/2013 30/5/2013 Change Year to Date

BLOM Bond Index (BBI)* 106.010 106.410 -0.38% -2.80%

Weighted Yield** 5.72% 5.63% 9 70

Weighted Spread*** 469 459 10 39

*Base Year 2000 = 100; includes US$ sovereign bonds traded on the OTC market

** The change is in basis points ***Against US Treasuries (in basis points)

Lebanese Government Eurobonds

Maturity - Coupon

6/6/2013

Price*

/30 /5/2013

Price*

Weekly

Change%

6/6/2013

Yield

30/5/2013

Yield

Weekly

Change bps

2014, Apr - 7.375% 103.14 103.35 -0.21% 3.61% 3.43% 17

2014, May - 9.000% 104.62 104.75 -0.12% 3.75% 3.71% 4

2015, Jan - 5.875% 101.95 102.38 -0.42% 4.60% 4.34% 26

2015, Aug - 8.500% 108.12 108.24 -0.11% 4.52% 4.49% 3

2016, Jan - 8.500% 108.90 109.03 -0.12% 4.84% 4.81% 3

2016, May - 11.625% 117.89 118.25 -0.31% 4.99% 4.90% 9

2017, Mar - 9.000% 111.88 112.62 -0.66% 5.48% 5.29% 19

2018, Nov - 5.150% 97.66 98.34 -0.70% 5.66% 5.51% 15

2020, Mar - 6.375% 100.65 101.38 -0.72% 6.25% 6.12% 13

2021, Apr - 8.250% 110.58 111.24 -0.60% 6.51% 6.41% 10

2022, Oct - 6.100% 98.04 98.23 -0.19% 6.38% 6.35% 3

2023, Jan - 6.00% 96.89 97.12 -0.23% 6.44% 6.40% 3

2024, Dec - 7.000% 103.95 104.50 -0.53% 6.51% 6.44% 7

2026, Nov - 6.600% 98.28 98.67 -0.40% 6.80% 6.75% 5

2027, Nov - 6.75% 98.61 98.95 -0.35% 6.90% 6.87% 4

*Bloomberg Data

The Eurobond market slid over the past week as political tension on the local and regional sides escalated, driving down the

BLOM bond index (BBI) by 0.38% to 106.01 points. Medium term Eurobonds maintained last week’s yield of 5.22%, while

the 10Y yields added 4 bps to stand at 6.44%. The BBI fell at a slower pace than the JP Morgan emerging markets’ bond

index that lost 1.60% to 640.88 points reflecting a thinner demand for bonds in the emerging markets.

In the US, regularly published employment reports remain a main indicator of investors’ behavior on the safe assets market.

Accordingly, a better performance on the job market indicates a higher demand for stocks and a lower interest in

Treasuries. During the week, investors speculated that the new publication, that is expected to be released soon, will reveal

that the job market improved at a slower pace. Accordingly, the 10Y US Treasury bonds yields slid by 5 bps to stand at

2.08%, while yields for medium term notes maturing in 2018 maintained their level of 1.01%. The respective spread

between the 10Y US bond yield and its comparable Lebanese Eurobond yield widened by 9 bps to reach 436 bps, while the

5Y spread maintained its quote of 421 bps.

Lebanon’s credit default swap for 5 years (CDS) has been fluctuating since year start maintaining an upward trend that is

probably related to the political instability and the security clashes north of the country. The 5Y Lebanon CDS widened this

week to 439-485 bps, compared to last week’s quote of 420-449 bps. Dubai and Saudi Arabia’s CDS quotes also expanded

to 232-253 bps and 67-76 bps from 201-211 bps and 64-70 bps respectively. As for emerging economies, insurance

premiums against state-debt default in Brazil and Turkey closed with respective quotes of 156-160 bps and 168-171 bps

compared to last week’s respective quotes of 141-144 bps and 132-134 bps.

4.30%

4.80%

5.30%

5.80%

Jun-12 Aug-12 Oct-12 Dec-12 Feb-13 Apr-13 Jun-13

Weighted Effective Yield of Eurobonds



S A L

EEEECONOMIC AND FINANCIAL NEWS CONOMIC AND FINANCIAL NEWS CONOMIC AND FINANCIAL NEWS CONOMIC AND FINANCIAL NEWS

BMI Selected Ratings

(Score out of 100, 100 = highest score for each

indicator)

Infra-

structure

Rating

Institutio

ns Rating

Openness

to

Investmen

t

Opennes

s to

Trade

Lebanon 46.08 42.91 50.05 56.05

Egypt 42.58 48.53 73.15 52.45

Algeria 35.69 34.45 37 49.95

Jordan 41.54 45.98 79.05 68.35

Morocco 41.81 51.69 41.95 67.75

Syria 40.43 28.98 38.9 39.5

Tunisia 48.31 57.52 50.7 79.45

Yemen 26.3 33.34 12.6 45.95

Bahrain 48.91 65.21 56.3 79.5

Oman 45.58 62.09 65.55 84.7

Qatar 51.93 64.72 63.6 73.7

Saudi Arabia

47.02 64.49 41.7 82.25

UAE 49.96 58.26 25.1 93.35

Source: Business Monitor International, May 2013

BDL’s Foreign Assets

In May (In $B)

Source: BDL

Lebanon’s Infrastructure Rating Stood at 46.08 in

May

Business Monitor International’s ratings, covering 17 countries,

showed that although Lebanon scored relatively well in terms of

Infrastructure and openness to trade, it still has a long way to go

in terms of developing its institutions and attracting investment,

areas in which GCC countries snatched the highest scores.

Lebanon scored 46.08 out of 100 (100 being the highest score)

in terms of infrastructure, a below-average grade owing it the

10th rank amongst the studied 17 countries and highlighting the

pressing and substantial investments needed to upgrade this

sector. In fact, Lebanon’s infrastructure grade was overthrown

by Qatar (51.93), the UAE (49.96) and Tunisia (48.31).

Meanwhile, Lebanese institutions received a grade of 42.91,

higher than 28.98 in Syria but much lower than Bahrain’s 65.21

and Qatar’s 64.72. In terms of its openness to investment,

Lebanon scored an average 50.05 while its openness to trade

score posted 56.05. The high scorer for openness to investment

was Jordan (79.05), while the UAE registered an almost perfect

score of 93.35 in terms of openness to trade. In order to

counter-balance the negative effects of the regional turmoil,

Lebanon therefore needs to develop an investment-favorable

environment so as to stop the already declining FDI inflows that

went from $4.30B in 2010 to $3.20 in 2011.

The Central Bank’s Assets Totaled $77.49B in May

The central bank’s end of May balance sheet unveiled declines

of 4.01% in the value of gold reserves and 1.44% in the value of

other foreign assets, resulting in a 0.35% month-on-month

decrease in total assets. However, the value of the latter,

standing at $77.94B, remained 1.62% higher on a year-to-date

basis. Although May’s gold reserves of $13.05B, mildly

recovered from mid-May’s $13B, in accordance with the rise in

the metal’s price, they continue to fall short of their respective

levels of $15.31B in December 2012 and $13.60B in April 2013

as the price of gold dropped by 17% from end of December and

by 6% from end of April. Meanwhile, the other foreign assets

registered a monthly decline, partly due to BDL’s intervention on

the foreign exchange market as the dollarization rate of deposits

slightly increased from 64.8% at end December 2012 to 65.1%

in April. However, the monthly slip in total assets was tempered

by the 3.49% rise in BDL’s securities portfolio to $11.22B. To

note that the securities portfolio includes accrued interest on

the portfolio. On the liabilities’ side, the rise in government

spending translated into a 3.44% m-o-m decrease in public

sector deposits to $5.64B while financial sector deposits edged

up by 0.68% to $57.82B.

2009 2010 2011 2012 2013

24

30.24 29.95

32.92

36.76



S A L

Commercial Banks’ Assets

Up to April (In $B)

Source: BDL

Commercial Banks Consolidated Total Assets Grew

to $155.11B In April

Total consolidated assets of commercial banks reached

$155.11B by April 2013, growing by 2.1% year-to-date

compared to a slightly faster pace of 2.9% during the same

period last year. Claims on the resident private sector,

representing 25% of total assets, grew by 2.3% y-t-d to $38.72B

and by 8.5% compared to April 2012 thus proving the resiliency

of private consumption. However, on a year-on-year basis, the

loans to deposit ratio reached 34.41% in April compared to

35.08% in the same month last year as the 7.9% growth in total

private deposits overtook the 5.8% progression in total private

loans. Lebanese commercial banks’ holdings of government

securities also increased by 3.7% since year start and 11.3%

year-on-year to reach $32.29B by April. More specifically,

treasury bills in local currency and Eurobonds respectively went

from $15.95B and $12.99B in April 2012 to $16.64B and $15.59B

as of end April 2013, thus signaling commercial banks’

inclination for foreign currency denominated government debt.

However, the rise in the commercial banks’ assets was

moderated by the 3% y-o-y drop in foreign assets to $24.08B

which mainly stems from the 10.6% fall in claims on the non-

resident private sector to $5.35B. As for liabilities, resident

private sector deposits, accounting for 66% of the total, rose by

2.2% y-t-d and by 6% y-o-y to $103.09B. Meanwhile, the non-

resident private sector deposits stood at $25.01B by April 2013

compared to $21.69B by April 2012. The dollarization rate of

private sector deposits slightly edged down from 65.15% in

April 2012 to 65.06% in April 2013, while it has been on a

slightly upward trend since year start.

2009 2010 2011 2012 2013

99.63

120.64

133.8

144.71

155.11



S A L

Airport Passengers

Source: Rafic Hariri International Airport

Beirut Hotels Occupancy in Q1

Source: E&Y Hotel Benchmark Survey

Airport Passengers at 2.40M up to May

During the first five months of 2013, Rafic Hariri International

Airport (RHIA) activity improved as the total number of

passengers increased by a yearly 8.8% to reach 2.40M. This

increase was mainly boosted by the advent of Easter vacation

and a brief stable period that followed Salam’s designation for

Premiership in April. Worth noting that during the first five

months of 2013, the number of arrivals surpassed that of

departures unlike the previous year when the Arab world unrest

and the Lebanese political deadlock took their toll on arrivals’

number. Accordingly, total arrivals grew by 12.3% y-o-y to

1.21M up to May 2013 and departures increased by 7.1% to

1.18M. However, 7,121 passengers were in transit, a 71.9% fall

from a year earlier. In terms of airline traffic, MEA continued to

top the list, accounting for almost 39% of total passengers,

followed by Emirates and Turkish Airlines with a similar stake of

6%. In the month of May alone, the number of airport

passengers edged down by less than 0.1% to 515,857 following

a 5.8% drop in the number of departures that reached 258,360.

As for arrivals, their number rose by 6.6% to 256,160, while

1337 passengers were in transit. To note that the Directorate

General of Civil Aviation Authority and Middle East Airlines-Air

Liban have recently chosen SITA, a global air transport IT firm, to

deliver several airport services at Beirut’s RHIA for the next 5

years. The company will install new platforms to improve output

and increase productivity at the airport.

Beirut Hotels Occupancy Rate Falls to 56% in the

First Quarter

The combination of internal political deadlock in the first quarter

of the year with the developments that took place in the region,

particularly in Syria, had their toll on Lebanon’s tourism and

hotel industry. Occupancy rates in Beirut stood at 55.7% during

Q1, a 16% decrease from the same quarter in 2012. Worth

noting that the number of tourists visiting Lebanon in Q1 this

year retreated by 12.5% y-o-y to reach 274,663 tourists. As for

the revenue per available room (RevPAR), it stood at $90 in Q1

2013, compared to $140 in the same period last year. Average

room rate in Beirut hotels reached $161 in Q1, down by 24%

compared to Q1 2012. Compared to the previous quarter,

occupancy rate registered a 12.33 percentage point (p.p) rise

with a 24% higher RevPAR than the $73 RevPAR of Q4 2012.

On a monthly basis, Ernst & Young reported that Beirut’s Hotel

Occupancy rate witnessed an annual decrease of 16p.p in

March, compared to the 21p.p increase recorded in the same

period of 2012.

1.63

1.93 1.91

2.21

2.4

30%30%30%30%

18%18%18%18%

----1%1%1%1%

16%16%16%16%

9%9%9%9%

-5%

0%

5%

10%

15%

20%

25%

30%

35%

0

0.5

1

1.5

2

2.5

2009 2010 2011 2012 2013

Passengers Number (In Millions, LA)

Annual Change in Passengers Number (In %, RA)

249249249249

206206206206211211211211

161161161161

175

97

140

90

69%

46%

66%

56%

40%

50%

60%

70%

50

70

90

110

130

150

170

190

210

230

250

2010 2011 2012 2013

Average Rate Per Room (In $, LA)Revenues Per Available Room (In $, LA)Occupancy Rates (In %, RA)



S A L

CORPORATE CORPORATE CORPORATE CORPORATE DEVELOPMENTSDEVELOPMENTSDEVELOPMENTSDEVELOPMENTS

BLOM Unaudited Financial Highlights – Q1 2013

(In $M)

Mar-13 Mar-12 % chg

Customer's

deposits 21,668 20,501 5.7%

Net Loans & advances to

customers

6,051 5,656 7.0%

Total assets 25,112 23,774 5.6%

Total Shareholders’

Equity

2,244 2,056 9.2%

Net Profit 87.12 84.12 3.6%

Source: Company Data

Audi Common Shares and BLOM Stock Index

Performance during 2012

Source: Beirut Stock Exchange, BLOMINVEST

BLOM Bank Financial Strength Rating (FSR)

Affirmed at ”BBB-“

The international credit agency, Capital Intelligence (CI)

affirmed BLOM Bank’s FSR at “BBB-“, a rating that mirrors

the bank’s strong franchise and liquidity, its cost efficiency

and its higher than sector-average profitability.

Nevertheless, the rating was weighed down by a weakened

loan asset quality due to an operating environment

characterized by domestic and regional uncertainties as well

as political risks. Although, the outlook on all ratings

remained “Stable”. In details, CI estimates that the domestic

economic slowdown is expected to weaken credit quality in

the household sector, one of BLOM’s growth segments.

Furthermore, the bank’s Foreign Currency (FC) Long- and

Short-Term Ratings are both affirmed at ‘B’, as they remain

constrained by Lebanon’s Sovereign Ratings. On the

positive side, CI mentioned that BLOM has consolidated a

strong customer deposit franchise, a leading position in a

broad cross section of businesses, and a significant

footprint within MENA. This has endowed the Bank with

strong liquidity and resilient and diversified sources of gross

income. The latter’s positive growth combined with a very

competitive cost structure enabled the Bank to record a

sustained rise in operating profit amidst the economic

slowdown in Lebanon and the ongoing turmoil in Syria and

Egypt.CI also asserted the Support Level at “3”, which

indicates the high probability of official support in case of

need, given BLOM Bank’s substantial systemic importance

and BDL’s record of assisting commercial banks.

Bank Audi Calls for an Extraordinary General

Assembly

Bank Audi s.a.l. – Audi Saradar Group invites all common

shareholders to attend an Extraordinary General Meeting to

be held at 10:30 am on Friday June 21, 2013 at the Bank’s

Head Office located at Audi Plaza, Bab Idriss, Beirut

Commercial Central District. The planned agenda will make

sure of the execution of the Resolution No. 1 related to the

cancelation of the Series “D” preferred shares in addition to

the Bank’s share capital increase. The meeting will also

verify the completion of the Resolution No.3 procedures

related to the increase of the Bank’s capital through the

issuance of 1,500,000 Series “G” Preferred shares and of

750,000 Series “H” Preferred shares. Both resolutions were

adopted on the 15th of April 2013 during the Extraordinary

General meeting of Shareholders. Moreover, the meeting

will also clear the Chairman and the Board of Directors of

the activities related to the Capital Increase.

1,100

1,120

1,140

1,160

1,180

1,200

1,220

$5.00

$5.20

$5.40

$5.60

$5.80

$6.00

$6.20

$6.40

$6.60

BLOM Stock Index (BSI) Audi Common Shares



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Solidere Stocks Performance during 2012

Source: Beirut Stock Exchange, Blominvest Research department

Solidere Calls for an Ordinary General Assembly

The Lebanese real estate developer, Solidere, is calling for

an ordinary shareholders meeting on June 24 at Biel, in

downtown Beirut. The meeting’s agenda will include the

discussion and endorsement of the 2012 financials, the

verification of the comptroller’s-findings, the agreement on

the allocation of the year’s profits and the approval of the

chairman’s 2009 report. This is in addition to clearing the

chairman and boards’ administrative duties for the financial

year 2012. Other diverse subjects are also on the meeting’s

schedule. To note that in the absence of a quorum, a 2nd

general assembly will be held on the 29th of July 2013 and

similarly a 3rd meeting will be set on the 20th of August

2013. Shareholders will be able to review the related

documents and reports 15 days ahead of the meeting at the

company’s headquarters.

$9.50

$10.50

$11.50

$12.50

$13.50

$14.50

$15.50

$12.00

$12.50

$13.00

$13.50

$14.00

$14.50

$15.00

$15.50

Solidere class "A" Solidere class "B"



S A L

FFFFOCUS IN BRIEFOCUS IN BRIEFOCUS IN BRIEFOCUS IN BRIEF

Lebanon: Flying Along With the Ailing Flock

Real GDP Growth rates (Annual percentage change)

2011 2012e 2013e

TOTAL ARAB REGION 2.2 4.8 4.4

2011 2012e 2013e

GCC 6.6 5.7 4.7

Bahrain 1.9 3.4 3

Kuwait 6.3 4.7 3.2

Oman 0.3 6.5 4

Qatar 13.5 6.2 5.2

Saudi Arabia 7.1 6.8 5.5

United Arab Emirates 4.2 4 3.8

2011 2012e 2013e

Levant 2.2 -1.7 2.6

Egypt 1.9 2.2 3.2

Iraq 8.6 11.3 7.8

Jordan 2.6 2.7 2.9

Lebanon 1.5 1.2 1.8

Palestine 12.2 5.3 4

Syrian Arab Republic -2 -31.4 -7.1

2011 2012e 2013e

Least

Developed

Countries -2.3 -4.6 3.2

Comoros 2.2 2.5 3.5

Djibouti 4.8 4.7 4.8

Mauritania 5.1 4.8 6.3

Somalia - -

Sudan 2.7 -7 2.5

Yemen 15.3 -1 4.5

2011 2012e 2013e

Maghreb -9.3 10.6 5.3

Algeria 2.9 2.8 2.9

Libya

-

61.3 100.7 15

Morocco 5 2.8 4.9

Tunisia -1.9 2.6 3.6

Sources: Escwa report “survey of economic and social developments in

the Arab region”, National sources and UN statistics

Figures for 2011 are preliminary.

e) Estimates and forecasts are as of March 2013.

ESCWA’s latest report about the Arab region titled “Survey of economic and social developments in the Arab region 2012-

2013”, offered us the opportunity to look at Lebanon’s economic performance from a wider angle lens and place the current

slowdown in its geopolitical context. As the title indicates, the report exposes the major trends and policy developments in

the Arab region, stressing a deepening polarization of the regional Arab economies, especially between energy exporters,

namely GCC countries, and net energy importers being Arab Mashreq and Arab Maghreb countries, and ultimately Arab

least developed countries.

From a regional perspective, two important sources exerting exogenous pressures on Lebanon can be distinguished. The

first is the threat of contagion from the unstable countries in Lebanon’s sub-region. And the second is the loss of the

regional leverage due to the growing economic polarization in the Arab region.

In fact, Lebanon comes under the sub-region of Arab Mashreq (Levant), which includes Egypt, Iraq, Jordan, Palestine and

Syria. All of these countries are witnessing domestic tensions reaching the level of regime changes and/or struggles, but

enjoy interregional connections translated through trade, investments and tourist flows1. Underperforming economies

combined with spillovers to the less agitated countries led the area’s combined economy to contract by 1.7% in 2012 after

a 2.2% growth in 2011, as per the report’s estimates.

1 With the exception of Palestine constrained to countries with pacts of peace with Israel



S A L

The main regional shake to Levant’s economy in 2012 was the intensification of war in Syria. Both of Lebanon and Jordan

were impacted by the abrupt 31% fall of Syrian’s economy and posted contracted growths of 1.2% and 2.7% respectively.

The violence in Syria adversely affected risk perception in the Levant as well as the inflow of capital and tourists, which had

been the main drivers of recent economic expansion in Lebanon and Jordan. In addition, the rapidly increasing number of

Syrian refugees to Jordan and Lebanon has put an additional fiscal burden on both countries, especially as no defensive

economic policies were put in place. Egypt faced its own domestic challenges and achieved a similar performance growing

by 2.2%. The only marking GDP growth rates in the Levant were in Iraq and Palestine and were actually reflective of special

conditions rather than real growths. Iraq benefited from a special factor of crude oil production expansion to post a real GDP

growth of 11.3% and Palestine’s GDP growth of 5.3% was based on a scaling effect for the ongoing reconstruction of Gaza

strip partially brushing off the prevailing instability and hostility.

Another regional source of economic threat for Lebanon is the fact that three of Levant countries are facing foreign

exchange risks. While Syria has been running a hyperinflation and a rapidly deteriorating currency, Egypt and Jordan are

expected to adopt tighter monetary policies and interest rates are likely to increase in order to deal with the devaluation of

their national currencies. This will put Lebanon, where the monetary stance is maintained neutral, at a competitive

disadvantage in the capital markets.

The spillovers from the group’s countries are not the only concern. The noted divergent performances across the rest of the

Arab sub-regions indicate a widening gap between energy exporters and importers. For instance, GCC countries are further

segmented from the rest of the regional economies, perhaps due to the fact that social imbalances can be more contained

in wealthy countries than others.

GCC countries have preserved their consistent growth rates posting a real growth of 5.7% in 2012 down from 6.6% in 2011,

as crude oil prices and production marked historic highs in 2012. And Maghreb countries also did well, particularly Libya

that remains on the path of recovery. Maghreb countries recorded 10.6% in 2012 up from -9.3% in 2011, a figure that was

brought by the 61% slam of Libya’s economy and the -1.9% contraction of Tunisia’s, two countries that underwent the

movements dubbed Arab springs in a previous round. Consequently, the Arab region’s economy posted an estimated

4.8%2 of real GDP growth in 2012 compared to 2.2% in 2011.

This economic polarization between sub-regions translates to a loss of regional leverage for the struggling countries. Lower

confidence has resulted in less business transactions between the GCC and the Levant, less touristic flows and less

employment. Also, political tensions and warnings from the governments of GCC to avoid agitated Levant countries further

affirmed the crack.

For 2013, the report notes that the Levant’s recovery is projected to be moderate at 2.6% on average, as no resolution to

deteriorating security situations is yet in sight, particularly in Syria. However this figure will be only influenced by a lower

contraction of Syria’s economy projected at 7.1% and by the increasing crude oil production of Iraq and other energy-related

activities in the sub-region. Meanwhile, the rest of the countries will barely nudge up as show the projections for Lebanon

and Jordan of 1.8% and 2.9% respectively. Business confidence and consumer sentiment are expected to stay weak in

2013, and further difficulties in the balance of payments are projected.

The counteract according to the report would be to stream flows of official development aid to reduce fiscal and foreign

exchange constraints, especially as the pro-growth mix of fiscal and monetary policy became unaffordable. Meanwhile, the

economic sustainability in the Arab region as a whole remains questionable as further signs of segmentation are being

observed. Oil exporters are not shielded and are still exposed to the downside risk of dependency on energy exports as

they remain far from their diversification targets. On the other hand, the weakened non-energy sector in the Levant and

Maghreb indicates that the economy of the Arab region is more vulnerable to abrupt changes in energy prices.

The report concludes that the structural weakness of the economies in the Arab region, represented by high unemployment

and income inequality, is the chronic undercurrent motivating social unrest and political instability. Furthermore, reviving

effective regional leverage through further cooperation and integration is crucial to compensate for failing market-bases

intraregional resource transfers.

2 Based on weighted averages, where weights for each year are based on GDP in 2005 constant prices

The Lebanon Brief

Page 14 of 14

Your Investment Reference

S A L

Research Department:

Riwa Daou [email protected]

Mirna Chami [email protected]

Maya Mantach [email protected]

Marwan Mikhael [email protected]

THE LEBANON BRIEF - mofcom.gov.cnimages.mofcom.gov.cn/lb/201306/20130614153730421.pdf · The Lebanon Brief Page 5 of 14 ISSUE 823; Week of 03 -08 June 2013 SAL Foreign Exchange Market

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