JUNE 05 - JUNE 11, 2017 WEEK 23

CONTACTS The WEEKLY MONITOR

Treasury & Capital Markets Economy ______Bechara Serhal p.2 CPI INCREASES BY A YEARLY 1.3% BY END-APRIL 2017 (961-1) 977421 The Consultation & Research Institute’s index of consumer prices has risen in April 2017, as the year- [email protected] on-year index increased by 1.3% compared to results of April 2016. The 12-month moving average yet Nadine Akkawi registered a mild increase of 0.1%. (961-1) 977401 [email protected] Also in this issue p.3 Total number of passengers at the airport up by 5.4% year-on-year in the first five months Private Banking of 2017 Toufic Aouad p.4 Gross public debt at US$ 76.9 billion at end-April 2017 (961-1) 954922 Surveys [email protected] ______Corporate Banking p.5 AMERICAN UNIVERSITY OF RANKS SECOND REGIONALLY BY QS WORLD UNIVERSITY RANKINGS Khalil Debs The American University of Beirut (AUB) was ranked 235th among 950 universities (2nd regionally), (961-1) 977229 according to QS World University Rankings for the school year 2016-2017. [email protected] Also in this issue p.5 Prices of available apartments for sale in Lebanon drops by 18% over past five years p.6 Slow recovery in 2017 to keep the outlook on consumer market muted, says BMI Research Corporate News ______RESEARCH p.7 BANKMED’S ASSETS EDGE UP TO US$ 16.8 BILLION AT END-MARCH 2017 Total assets of BankMed reached US$ 16.8 billion at end-March 2017, up by 4.2% from end-2016, as per Marwan Barakat (961-1) 977409 Bankdata Financial Services. [email protected] Also in this issue Jamil Naayem p.8 Shaker Holdings sells the remainder of its stake in BLOM Bank (961-1) 977406 p.8 Construction of Qaissamani Dam in Falougha completed [email protected] p.8 Spinneys to open three new branches by the end of 2017 p.8 Plastic and paper bag factory to open in Nabatieh in October Salma Saad Baba (961-1) 977346 Markets In Brief [email protected] ______p.9 STABILITY IN EQUITY AND BOND PRICES AMID CONTINUOUS ELECTORAL LAW Fadi Kanso DISCUSSIONS (961-1) 977470 Amid continuous electoral law discussions, Lebanon’s capital markets saw this week stability in equity [email protected] and bond prices along with balanced FX activity. In details, the BSE total trading value reached US$ 12.9 million as compared to an average weekly turnover of US$ 12.6 million since the beginning of Gerard Arabian 2017, while the price index reported a mild rise of 0.2%. At the level of the Eurobond market, medium- (961-1) 964047 term to long-term papers saw two-way flows, which was reflected by a stability in the weighted [email protected] average bid Z-spread at 403 bps. As to the cost of insuring debt, Lebanon’s five-year CDS spreads expanded from 365 bps last week to 385 bps this week amid domestic local political bickering. On the Farah Nahlawi (961-1) 959747 FX market, the commercial demand for the US dollar persisted, while the offer was shy. This kept the [email protected] LP/US$ interbank rate at LP 1,514-LP 1,514.50.

Anthony Badr (961-1) 964714 LEBANON MARKETS: WEEK OF JUNE 05 - JUNE 11, 2017 [email protected]

Nivine Turyaki (961-1) 959615 [email protected]

Week 23 June 05 - June 11, 2017 1 Bank Audi sal - Group Research Department - Bank Audi Plaza - Bab Idriss - PO Box 11-2560 - Lebanon - Tel: 961 1 994 000 - email: [email protected] JUNE 05 - JUNE 11, 2017 WEEK 23

ECONOMY ______CPI INCREASES BY A YEARLY 1.3% BY END-APRIL 2017

The Consultation & Research Institute’s index of consumer prices has risen in April 2017, as the year- on-year index increased by 1.3% compared to results of April 2016. The 12-month moving average yet registered a mild increase of 0.1%.

Five of the nine indices registered increases this April. The most significant increase was registered by the “Recreation” category (5.3%), followed by the “Healthcare” category (4.8%) and the “Food and Beverages” category (4.2%). On the other hand, three indices witnessed decreases, with the most significant decrease registered by the “Apparel” category (-9.4%), followed by the “Durable Consumer Goods” category (-4.7%).

The April 2017 year-on-year “Food and Beverages” index increased by 4.2% since April 2016. Three of its four main indices registered increases, namely those of the “Tobacco Products” category (8.2%), the “Food” category (4.1%) and the “Nonalcoholic Beverages” category (2.1%). On the other hand, the “Alcoholic Beverages” category witnessed a decrease by 2.2% this April, compared to the results of the same month in 2016.

The index for “Food” increased by 4.1% compared to its level last year, as seven of the food group indices have registered increase. The highest increases being in the “Vegetables” category (24.5%), followed by the “Fruits” category (10.9%) and the “Sugar and Confectioneries” category (7.3%). Three categories registered decreases, namely those of the “Other Food Products” category (-5.7%), the “Cereal and Bakery Products” category (-2.4%) and the “Grains and Nuts” category (-0.6%).

Apparel year-on-year prices registered a 9.4% decrease in April 2017. This was the result of the decreases in both of its two main categories. The “Footwear” index witnessed a sharp drop by 21.7%, while the “Clothing and Sewing Materials” index decreased by 3.9% this month.

The “Durable Consumer Goods” index decreased by 4.7% since April 2016. Five categories witnessed decreases, the most significant being in the “Linens” category (-12.5%), followed by the “Cleaning

INFLATION RATE (12-MONTH MOVING AVERAGE)

Source: Consultation & Research Institute

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Products and Services” category (-9.3%). Another two categories recorded slight increases in April 2017, namely those of the “Household Furnishings” category (0.3%) and the “Kitchenware” category (0.1%).

The healthcare index increased by 4.8% since April 2016. Two indices registered increases, namely those of the “Outpatient Services” (13.0%) and the “Inpatient Services” (2.1%) categories. The sole decrease was registered in the index for “Medications and Medical Accessories” category (-11.0%).

The CPI component for “Transportation and Telecommunications” increased by 0.7% (year-on-year) in April 2017, due to an equivalent increase in the “Transportation” index (0.8%), while the “Telephone Services” index remained stable.

The index for education decreased by 0.9% from the previous year, due to the decreases in all of its three categories, namely those of “School Transportation” category (-4.6%), “Educational Books and Supplies” category (-1.7%) and “Tuition Fees” category (-0.2%) this April.

The index for recreation increased by 5.3% compared to its results in April 2016, due to the surge in both of its two main indices: the “Reading Materials and Photography” category (7.1%) and the “Movies and Restaurants” category (5.0%).

The index of “Other Goods and Services” remained stable since April 2016. This was basically due to the slight increase registered in the “Jewelry” category (0.7%), which neutralized the equivalent decrease in the “Personal Care” category (-0.5%). ______TOTAL NUMBER OF PASSENGERS AT THE AIRPORT UP BY 5.4% YEAR-ON-YEAR IN THE FIRST FIVE MONTHS OF 2017

Figures released by the Hariri International Airport revealed that the total number of passengers recorded a yearly 5.4% increase in the first five months of 2017. The total freight handled by the airport edged up by 3.2% year-on-year in the aforementioned period. In contrast, the number of aircraft posted a decrease of 3.1% year-on-year in the aforementioned period.

A detailed look at the activity shows that the number of incoming passengers increased by a yearly 5.1% and that of departing passengers rose by 5.8% to reach 1,397,914 and 1,442,405 respectively in the first

PASSENGERS AT THE AIRPORT *

Sources: Rafic Hariri International Airport, Bank Audi's Group Research Department

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five months of 2017. The number of transiting passengers fell by 69.1% year-on-year to attain 1,904 in the first five months of 2017. When including the latter mentioned category, the total number of passengers using the airport attained 2,842,223, up by a yearly 5.3%. Excluding transiting passengers, the total would be 2,840,319, i.e. 5.4% higher than the level seen in the first five months of 2016.

Looking at the aircraft activity, landings and take-offs recorded a 3.1% decrease each with the former and the latter amounting to 13,097 and 13,096 planes each in the first five months of 2017. ______GROSS PUBLIC DEBT AT US$ 76.9 BILLION AT END-APRIL 2017

The data published by the Ministry of Finance in Lebanon showed that the country’s gross debt reached US$ 76.9 billion at end-April 2017, up by 2.7% from the level seen at end-2016, and up by 7.4% from the level registered at end-April 2016.

Domestic debt was higher by 0.6% from end-2016 and by 6.9% from end-April 2016 to reach a total of US$ 47.0 billion at end-April 2017. Lebanon’s external debt grew by 6.3% from end-2016 and by 8.1% from end-April 2016 to stand at around US$ 29.9 billion at end-April 2017.

In this context, the public sector deposits at the Central Bank rose by 16.2% from end-2016 and by 15.3% from end-April 2016 to stand at US$ 6.4 billion. Public sector deposits at commercial banks edged up by 5.7% from end-2016 while increasing by 16.7% from end-April 2016 to reach US$ 4.2 billion at end-April 2017.

As such, net public debt which excludes the public sector deposits at the Central Bank and commercial banks from overall debt figures, rose by 1.4% from end-2016 and it rose by 6.1% from end-April 2016 to reach a total of US$ 66.3 billion at end-April 2017. Net domestic debt amounted to US$ 36.5 billion at end-April 2017, down by 2.3% from end-2016, yet up by 4.5% from end-April 2016.

GROSS PUBLIC DEBT (US$ BILLION)

Sources: Association of Banks in Lebanon, Bank Audi's Group Research Department

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SURVEYS ______AMERICAN UNIVERSITY OF BEIRUT RANKS SECOND REGIONALLY BY QS WORLD UNIVERSITY RANKINGS

The American University of Beirut (AUB) was ranked 235th among 950 universities, according to QS World University Rankings for the school year 2016-2017. This places AUB at the top of all global universities, which counts approximately 26,000. The ranking climbed 33 spots in one year, from 268 to 235.

According to the Vice President for Advancement at AUB, QS ranking is considered the most comprehensive ranking in the world. Students, parents and employers rely on this ranking to compare between global universities.

QS ranks universities according to the quality of education, the academic body, the quantity and quality of research conducted by professors. It also looks at the diplomas the professors hold, the ratio of number of faculty members to number of students, employer reputation, and the leadership roles handled by the graduates. The QS World University Rankings are published annually by Quacquarelli Symonds.

In the Arab region, the American University of Beirut ranked second, only beaten by King Fahd University of Petroleum & Minerals. It was followed by King Saudi University and King Abdulaziz University, which ranked by third and fourth respectively.

Globally, the American University of Beirut ranked 235th amongst universities. It was preceded by University Complutense Madrid (233rd) and Loughborough University (234rd). Moreover, it was followed by Al Farabi Kazakh University and Universtiy Grenoble-Alpes.

AUB scores well in the categories of “employer reputation” and “international faculty”, ranking in the top 100 of both indicators. “Employer reputation” is based on over 40,000 survey responses from employers around the world.

The QS employer reputation survey is one indicator used in compiling the QS World University Rankings, forming 10% of the overall rankings score. It is based on a major global survey of graduate employers. Respondents are asked to identify the universities they regard as producing the best graduates.

The results provide a unique insight into the global hierarchy of universities as it stands in the eyes of those who, perhaps more than any other group, play a role in determining the value of a degree in the job market.

The latter is one of the most important indicators for student recruitment because it correlates with the employability of fresh graduates, as per Vice President for Advancement at AUB. ______PRICES OF AVAILABLE APARTMENTS FOR SALE IN LEBANON DROPS BY 18% OVER PAST FIVE YEARS

Prices of available apartments for sale in Lebanon dropped by 18% over the past five years, according to the recently updated InfoPro Price Index. Its Inventory Index also revealed that around half of apartments in new buildings were still for sale.

The Residential Real Estate Price Index and Residential Real Estate Inventory Index are primary indicators of the housing market’s health.

The indices, launched for the first time six months ago and recently updated again, track price evolution and the inventory of apartments across Administrative Beirut, the suburbs, and the main urban areas of the Metn, , Kesrouan, and Aley cazas.

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The Price Index tracks the asking price and not the actual sale price of apartment units. The Inventory Index tracks the total number of available new apartment units that are for sale.

The year 2012 was used as the base year by the indices. A nominal value of 100 was assigned for the beginning of that year. Both indexes are processed at Infopro’s Research Department in extensive details. Figures are available by caza, city, street, neighborhood, and apartment size.

According to the Inventory Index, small units measuring under 150 square meters (m2) are demanded the most. The stagnating sales of large units are recently showing signs of life due to the good deals on offer.

The price index reached the 81.5 mark in the first half of 2017, from 100 as a reference value set in 2012. The inventory index recorded 218 in the same period, from the 100 reference value in 2012.

This means that the number of apartments available for sale has more than doubled in five years.

The average prices for Beirut dropped by almost 20% to US$ 3,150 per m2, compared to the base year. It is worth noting that more than 60% of total sold apartments in the caza have sizes less than 220 m2.

Apartments were sold on average for US$ 1,890 per m2 in Baabda, which witnessed a 17% price reduction. Kesrouan was a bit less expensive, with unit prices averaging US$ 1,730 per m2.

The stock of apartments available for sale was one of the lowest among the cazas. Nonetheless, unlike other cazas, prices in Metn remained stable, at US$ 1,920 per m2. ______SLOW RECOVERY IN 2017 TO KEEP THE OUTLOOK ON CONSUMER MARKET MUTED, SAYS BMI RESEARCH

According to BMI Research, a slow recovery in economic growth in 2017 would keep the outlook on the consumer market muted. Lebanon's consumer spending and economic growth would struggle to return to its pre-2010 levels.

BMI Research anticipates a tepid outlook for the Lebanese consumer in 2017, on the back of elevated security risks from regional conflict, as well as the Lebanese persistent political crisis, which are weighing on economic growth. In the past couple of years, Lebanon's consumer outlook was severely hit by the country's migrant crisis, stemming from the influx of Syrian refugees, as well as rising conflict risk.

The Lebanese economy has suffered repercussions from the civil war in neighboring Syria, as well as the uncertainty in its domestic political environment. Real GDP growth has slowed significantly since 2010, with economic growth over the next five years (2017-2021) struggling to recover. Over 2017, BMI Research forecasts Lebanon’s real GDP growth to grow by 2.3%, a sluggish improvement from a 1.5% and an estimated 1.7% year-on-year increases recorded in 2015 and 2016, respectively.

The weakness of the Lebanese economy places pressure on private consumption growth. BMI forecasts modest private consumption growth over the next five years to 2021, growing by an average of 4.0%, lower than 5.1% during the 2000-2010 period (prior to the ongoing regional conflict). Nonetheless, over 2017, the firm does note gradual improvements in private consumption growth, forecast to grow by 3.8% up from 3.4% in 2016.

Furthermore, Lebanon's inflation rate would move backinto positive territory at a healthy rate of 2.8% following a two-year deflation (contracting by 3.7% in 2015 and 0.8% in 2016).

BMI believes the Lebanese consumer market would be substantially supported by its reliance on remittances. The expatriate community would remain an important source of external capital, which would boost household spending amid depressed economic conditions.

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CORPORATE NEWS ______BANKMED’S ASSETS EDGE UP TO US$ 16.8 BILLION AT END-MARCH 2017

Total assets of BankMed reached US$ 16.8 billion at end-March 2017, up by 4.2% from end-2016, as per Bankdata Financial Services. Loans to customers edged down by 1.1% from end-2016 to reach US$ 5.1 billion at end-March 2017. Customers’ deposits amounted to US$ 12.2 billion at end-March 2017, up by 1.2% from end-2016.

BankMed’s consolidated net profits amounted to US$ 35.9 million in the first quarter of 2017, up by a yearly 1.3% from US$ 35.4 million in the same period of 2016.

Net interest income fell by an annual 10.3% to US$ 65.3 million in the first three months of 2017. Net fee and commission income stood at US$ 19.0 million in the first quarter of 2017, up from US$ 14.2 million in the first quarter of 2016. Net gains on financial assets and financial investments declined by 44.1% and 85.3% respectively over the covered period.

Net operating income amounted to US$ 111.9 million in the first quarter of 2017, falling by 12.8% year- on-year. Total operating expenses decreased by 14.3% annually, from US$ 79.1 million in the first quarter of 2016 to US$ 67.8 million in the same period of 2017, of which staff expenses amounted to US$ 32.2 million, down by 29.5% year-on-year, and administrative and other operating expenses totaled US$ 31.2 million, up by a yearly 10.2%.

The bank’s cost-to-income ratio rose from 50.1% in the first quarter of 2016 to 58.2% in the corresponding period of 2017.

SELECTED BANKMED INCOME STATEMENT INDICATORS (US$ MILLION)

Sources: Bankdata Financial Services, Bank Audi's Group Research Department

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______SHAKER HOLDINGS SELLS THE REMAINDER OF ITS STAKE IN BLOM BANK

Shaker Holdings sold the remainder of its stake in BLOM Bank consisting of 6.5 million common shares to Banorabe S.A. and BLOM Bank itself for a total of US$ 69.8 million.

Luxembourg-based holding company Banorabe, part of the BLOM Group family, acquired five million shares for a total of US$ 53.5 million, thus raising its stake in the bank to 17.5% from 15.2%.

With a stake of 34.4%, Bank of New York is the major shareholder in BLOM Bank whose total equity stood at US$ 2.9 billion at the end of 2016. Other major shareholders include members of the Azhari family (7.5%), among others.

BLOM Bank also said it bought back from Shaker Holdings the remaining 1.5 million common shares for a total of US$ 16.3 million.

Last year, the bank bought five million shares from Shaker Holdings for a total of US$ 49.7 million. BLOM said at that time that it bought the shares for its stock after getting the approval of the Central Bank. ______CONSTRUCTION OF QAISSAMANI DAM IN FALOUGHA COMPLETED

The construction of Qaissamani Dam, located in Falougha-Higher Metn, was completed.

Construction began in 2013 but was delayed several times.

The Qaissamani Dam has the capacity to store one million cubic meters of water. Construction costs estimated at US$ 23 million were mostly financed by the Kuwaiti Fund for Arab Economic Development (KFAED). The Council for Development and Reconstruction (CDR) financed the remaining cost.

The dam’s construction was undertaken by local contracting firm Mouawad-Eddé. A joint venture between the local LibanConsult AGM and the Kuwaiti Associated Consulting Engineers (ACE) served as the project’s consultants.

The rock-fill dam is 200 meters wide and 30 meters high. ______SPINNEYS TO OPEN THREE NEW BRANCHES BY THE END OF 2017

Spinneys is planning to open three new branches by the end of 2017. The branches would be located in Ain el Tineh, and Mtayleb.

The investment value for all three branches is US$ 6 million. The supermarket already opened a branch this year at The Spot Choueifat. This brings the total number of branches to 17, including three “Happy” discount stores. The supermarket imports many international brands directly.

The Ain el Tineh and Jdeideh branches would open this month. The Mtayleb branch would be open later through the year. ______PLASTIC AND PAPER BAG FACTORY TO OPEN IN NABATIEH IN OCTOBER

Chouayb for Industry and Trade would open in October a factory for plastic and paper bags in Nabatieh.

Production capacity would reach 200 tons of raw plastic per month, which would be distributed to supermarkets, bakeries and retail shops regionally.

Around US$ 2 million would be invested in the 2,000 square meter factory.

The company would borrow a subsidized loan to finance part of its project.

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CAPITAL MARKETS ______MONEY MARKET: FC DEPOSITS REMAIN THE MAIN DRIVE FOR TOTAL DEPOSITS GROWTH

The overnight rate initiated the week at 12% given the increased demand for LP to pay corporate tax, yet went back to 3.0% at the end of the week. As to Certificates of Deposits, small subscriptions of LP 4 billion were made in the 60-day category, bringing total subscriptions in this category to LP 691 billion since the beginning of 2017.

Resident banking deposits continued to trace an upward slope for the third consecutive week, registering a growth of LP 737 billion, as per the latest monetary statistics released by the Central Bank of Lebanon for the week ending May 25, 2017. This was mainly driven by a LP 557 billion increase in FC deposits (the equivalent of US$ 369 million), and a LP 180 billion rise in LP deposits amid a LP 145 billion growth in LP demand deposits and a LP 35 billion increase in LP saving deposits. These weekly variations compare to an average weekly growth of US$ 171 million for FC deposits and a shy average weekly rise of LP 6 billion for LP total deposits since the beginning of 2017. The weekly growth in resident banking deposits led to an expansion in money supply in its broadest sense (M4) of LP 730 billion amid a LP 77 billion retreat in money in circulation and a LP 70 billion rise in the non-banking sector Tbs portfolio.

On a cumulative basis, total resident deposits expanded by LP 6,015 billion since the beginning of 2017, mainly driven by a LP 5,722 billion growth in FC deposits (the equivalent of US$ 3,796 million. Accordingly, total money supply (M4) expanded by LP 5,698 billion since the beginning of 2017 amid a LP 301 billion fall in currency into circulation and a LP 14 billion decline in the non-banking sector Tbs portfolio.

INTEREST RATES

Source: Bloomberg ______TREASURY BILLS MARKET: SHY WEEKLY NOMINAL DEFICIT OF LP 56 BILLION

On the secondary Tbs market, the 10-year category was traded on the yield curve. At the level of the primary market, the auction results dated June 1, 2017 showed a nominal deficit of LP 56 billion. This resulted from total subscriptions of LP 205 billion that were distributed as follows: LP 51 billion in the three-month category, LP 53 billion in the one-year category and LP 101 billion in the five-year category. Maturities amounted to LP 261 billion, with the five-year category capturing circa 97% of the total, while the one-year category accounting for the remaining 3%.

In parallel, the latest auction results for value date 8th of June 2017 showed that BDL continued to provide lower allocations for longer-term categories in line with its strategy to encourage LP lending to the private sector. Accordingly, the six-month category had an allocation of 71.7%, followed by the two- year category with 35.2% and the ten-year category with 14.4%.

On a cumulative basis, total subscriptions amounted to LP 8,978 billion over the first five months of 2017 as compared to total maturities of LP 8,768 billion, resulting in a nominal surplus of LP 210 billion.

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TREASURY BILLS

Sources: Central Bank of Lebanon, Bloomberg ______FOREIGN EXCHANGE MARKET: BALANCED DEMAND AND SUPPLY FORCES

A regular calm mood swayed over the foreign exchange market this week. The commercial demand for the US Dollar persisted in relatively moderate volume, while the offer was quite shy. Within this context, commercial banks traded the US dollar at a rate hovering between LP 1,514 and LP 1,514.50 (slightly above the upper bound of the Central Bank of Lebanon’s intervention bracket).

EXCHANGE RATES

Source: Bank Audi’s Group Research Department ______STOCK MARKET: MIXED PRICE MOVEMENTS ON THE BSE

The BSE total trading value amounted to US$ 12.9 million this week as compared to US$ 7.6 million in the previous week and an average weekly turnover of US$ 12.6 million since the beginning of the year 2017. Accordingly, the average daily trading value rose from US$ 1.5 million last week to US$ 2.6 million this week, which resulted into a 73.3% surge in the trading volume index to reach 107.90 this week.

As far as prices are concerned, the price index edged up by 0.2% to close at 103.30. Five out of 12 traded stocks posted price gains, while six stocks registered price declines and one stock saw no price change week-on-week.

In details, banking shares captured 92.2% of activity. Bank Audi’s “listed” share led the gainers’ list, registering a 3.3% rise in its price to close at US$ 6.20. Bank Audi’s GDR price edged up by 0.8% to US$ 6.25. Bank Audi “Preferred I” share price closed 0.3% higher at US$ 101.00. BLOM’s “listed” share price increased by 0.5% to close at US$ 10.95. BLOM’s GDR price nudged up by 0.4% to US$ 11.90. In contrast,

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Byblos Bank’s “listed” share price retreated by 0.2% to US$ 25.10. Bank of Beirut “Preferred H” share price went down by 0.2% to US$ 25.10. Solidere shares accounted for 7.7% of the total trading value. Solidere “A” share price declined by 0.4% to US$ 9.00. Solidere “B” share price nudged down by 0.2% to US$ 8.95. Industrial stocks accounted for the remaining 0.1%. Holcim Liban’s share price fell by 3.7% to US$ 11.65. Ciments Blancs Bearer’s share price plunged by 10.8% to US$ 2.80 in a market that suffers from a lack of efficiency and liquidity.

The BSE’s weekly performance compared to a 0.8% decrease in broader Arabian markets’ share prices (as per S&P Pan-Arab Composite Index) and a 0.3% rise in broader emerging markets’ share prices (as per S&P Emerging Frontier Super Composite Index).

AUDI INDICES FOR BSE

Sources: Beirut Stock Exchange, Bank Audi’s Group Research Department ______BOND MARKET: TWO-WAY FLOW ACTIVITY PREVAILS

The Eurobond market saw a two-way flow activity this week that was mainly concentrated on medium term papers. International investors showed a heavy demand and offer for Lebanese sovereign paper maturing in November 2028, which was met locally. Also, the longer-term papers maturing in March 2037 witnessed a two-way foreign activity. On the domestic level, papers maturing in May 2023 and November 2024 were traded in relatively shy volumes.

Within this context, the weighted average bid Z-spread remained stable at 403 basis points, while the weighted average yield increased by a tiny four basis points, moving from 5.63% last week to 5.67% this week. As to the cost of insuring debt, Lebanon’s five-year CDS spread expanded from 350-380 basis points last week to 370-400 basis points this week amid emerging domestic political bickering over the new electoral law.

EUROBONDS INDICATORS

Source: Bank Audi’s Group Research Department

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INTERNATIONAL MARKET INDICATORS

Sources: Bloomberg, Bank Audi's Group Research Department

______DISCLAIMER

The content of this publication is provided as general information only and should not be taken as an advice to invest or engage in any form of financial or commercial activity. Any action that you may take as a result of information in this publication remains your sole responsibility. None of the materials herein constitute offers or solicitations to purchase or sell securities, your investment decisions should not be made based upon the information herein.

Although Bank Audi Sal considers the content of this publication reliable, it shall have no liability for its content and makes no warranty, representation or guarantee as to its accuracy or completeness.

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