WEEKLY MONITOR APRIL 19 - APRIL 25, 2021 WEEK 17

______Economy p.2 CONTRACTION IN DEPOSITS AND LOANS AT A MUCH LESS SIGNIFICANT PACE OVER THE FIRST TWO-MONTH PERIOD Monetary/banking sector figures for the first two months of 2021 were released this week. They show CONTACTS a further widening in the balance of payments deficit to reach US$ 751 million in the first two months Treasury & Capital Markets of 2021, against a deficit of US$ 505 million in the 2020 corresponding period.

Bechara Serhal Also in this issue (961-1) 977421 p.3 Value of cleared checks down by 38% in the first quarter of 2021 [email protected] p.4 Slowdown in the activity of the property market in first quarter of 2021 Surveys Toufic Aouad ______(961-1) 954922 p.5 DE-TAXED TOURISTIC SPENDING DOWN BY A YEARLY 44% IN THE FIRST QUARTER OF [email protected] 2021 Corporate Banking As per Global Blue, the firm that reimburses VAT to tourists at Lebanese border points, purchases by tourists in Lebanon whose VAT was claimed and which gives a fair view about tourists’ shopping Carol Ayat trends, contracted by 44% during the first quarter of 2021 compared to the same period of 2020. The (961-1) 959675 number of transactions retreated by a yearly 79% in the first quarter of this year. [email protected] Also in this issue p.6 Progress on the political front needed for real progress on the economic front in Lebanon, as per Emirates NBD

______Corporate News p.7 FATTAL TO SELL PFIZER VACCINE TO COMPANIES STARTING IN JULY Fattal Healthcare entered the discussion to make vaccines available to private sector companies for a fee. Fattal will be the second supplier following Malia Group that started offering Russia’s Sputnik V vaccine.

RESEARCH Also in this issue p.7 New alliance between UAE's ALEC and Lebanon's BUTEC to target industrial and environmental projects Marwan Barakat (961-1) 977409 p.7 US startup Ramp, co-founded by a Lebanese, valued at US$ 1.6 billion [email protected] p.7 Lebanese startup Ostaz (Synkers) acquired by Inspired Group p.8 Wave bets on electric bikes in Lebanon Salma Saad Baba p.8 SwitchMed backs sustainable firms in 5 Mediterranean countries (961-1) 977346 [email protected] ______Markets In Brief Farah Nahlawi (961-1) 959747 p.9 STATUS-QUO MOOD REIGNS OVER BLACK FX MARKET, AWAITING NEW PLATFORM [email protected] Amid lingering domestic political bickering and continuous cabinet deadlock, and along international warnings against exhausting BDL’s FX reserves and its detrimental effect on the Lebanese economy, and Zeina Labban while all eyes remained focused on the upcoming new FX platform, a status-quo mood reigned over the (961-1) 952426 black FX market, while the equity and bond markets followed an upward trajectory this week. In details, [email protected] the exchange rate continued to hover around LP/US$ 12,000, awaiting the new FX platform (Sayrafa) aimed to increase the FX market efficiency and curb currency swings. This came along continuous calls to ration Michele Sakha subsidies in order to preserve remaining dwindling FX reserves. In parallel, the BSE registered a 2.5% rise (961-1) 977102 in prices week-on-week, which brought year-to-date price gains to 33%, mainly on hedging against crisis. [email protected] Finally, the bond market saw weekly price expansions of 0.25 pt to 0.63 pt, helped by some international bid, to reach 11.75-12.50 cents per US dollar on Friday. LEBANON MARKETS: APRIL 19 - APRIL 25, 2021

Money Market BSE Equity Market LP Tbs Market Eurobond Market ⬆ LP Exchange Market CDS Market - ⬌⬆ ⬆ Week 17 April 19 - April 25, 2021 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] APRIL 19 - APRIL 25, 2021 WEEK 17

ECONOMY ______CONTRACTION IN DEPOSITS AND LOANS AT A MUCH LESS SIGNIFICANT PACE OVER THE FIRST TWO-MONTH PERIOD

Monetary/banking sector figures for the first two months of 2021 were released this week. They show a further widening in the balance of payments deficit to reach US$ 751 million in the first two months of 2021, against a deficit of US$ 505 million in the 2020 corresponding period. This year’s deficit is driven by a decline in net foreign assets of BDL by US$ 1,088 million, while banks’ net foreign assets rose by US$ 337 million over the 2021 two-month period.

At the banking sector level, sector statistics show a continuing decline in deposits and loans though at a much less significant pace, a further contraction in interest rates along with a rise in banks’ primary liquidity abroad.

While bank assets almost stabilized year-to-date, customer deposits slightly contracted by US$ 288 million over the first two months of 2021 (against a much sharper contraction of US$ 7,151 million over the first two months of 2020) to reach a total deposit base of US$ 138.8 billion in February 2021, against US$ 139.1 billion at end-2020, US$ 158.9 billion at end-2019 and US$ 174.3 billion at end-2018. It is worth mentioning that FX deposits contracted by US$ 678 million over the first two-month period, while LL deposits rose by US$ 390 million. As such, deposit dollarization inched slightly downward to report 80.0% in February 2021, against 80.4% in December 2020.

Loans to the private sector contracted by US$ 677 million over the first two months of 2021 (against a much more significant decline of US$ 3,689 million over the first two months of 2020) to reach a total lending base of US$ 35.5 billion in February 2021, against US$ 36.2 billion at end-2020, US$ 49.8 billion at end-2019 and US$ 59.4 billion at end-2018. It is worth mentioning that FX loans contracted by US$ 429

US$EVOLUTIONUS$ billion billion OF LEBANON'S BANKING SECTOR DEPOSITS

1010 174174 169169 1010 162162 159159 1010 152152 150150 139139 139139 1010

1010

120120 Dec-2015Dec-2015 Dec-2016Dec-2016 Dec-2017Dec-2017 Dec-2018Dec-2018 Dec-2019Dec-2019 Dec-2020Dec-2020 Feb-2021Feb-2021

EVOLUTION OF LEBANON'S BANKING SECTOR LOANS US$US$ billion billion

00

6060 59 00 5757 59 5454 5050 5050

00 3636 3535

00 Dec-2015Dec-2015 Dec-2016Dec-2016 Dec-2017Dec-2017 Dec-2018Dec-2018 Dec-2019Dec-2019 Dec-2020Dec-2020 Feb-2021Feb-2021

Sources: Central Bank of Lebanon, Bank Audi’s Group Research Department

Week 17 April 19 - April 25, 2021 2 APRIL 19 - APRIL 25, 2021 WEEK 17

million over the 2021 first two-month period, while LL loans dropped by US$ 249 million. As such, loan dollarization continued its downward descent to report a low of 59.5% in February 2021.

Interest rates continued their declining trend as well. The average US$ deposit rate reported 0.54% in February 2021, against 0.94% in December 2020 and a peak of 6.61% in October 2019. The average LL deposit rate reported 2.11% in February 2021, against 2.64% in December 2020 and a peak of 9.40% in November 2019. As to debtor rates, the average US$ loan rate reported 6.92% and the average LL loan rate reported 7.59% in February 2021.

With respect to liquidity, Lebanese banks liquidity with foreign banks continued its recent ascent, in conformity with BDL circular 154, rising by US$ 102 million in February 2021 and accumulating a cumulative rise of US$ 539 million since October 2020.

As to shareholders’ equity, it reported a total of US$ 17.2 billion at end-February 2021, against US$ 20.8 billion at end-February 2020. Despite banks’ efforts to increase capital as per BDL requirements, this equity contraction reflects the noticeable bank losses over the period amid significant provisioning needs at large.

______VALUE OF CLEARED CHECKS DOWN BY 38% IN THE FIRST QUARTER OF 2021

Total value of cleared checks, an indicator of consumption and investment spending in the Lebanese economy, declined by 37.8% year-on-year in the first quarter of 2021 pointing to a sharp drop in spending during the above mentioned period.

The value of cleared checks reached US$ 9,997 million in the first quarter of 2021 down from US$ 16,075 million in same quarter of previous year. A breakdown by currency shows that the banks’ clearings in Lebanese Pounds amounted to LP 6,256 billion (-26.5%) in Q1 of 2021 while those in US$ amounted to US$ 5,847 million (-43.9%).

Moreover, the number of cleared checks registered 911,875 in the first quarter of 2021, down by 50.9% from 1,855,380 checks in the corresponding period of 2020. The average value per check rose by 26.5% year-on-year to attain US$ 10,963 in the aforementioned months of 2020.

It is worth noting that the value of returned checks registered US$ 137 million in the first quarter of 2021 down by a yearly 58.4%. The number of returned checks stood at 8,522 in the first quarter of 2021, down from 49,808 in the same quarter of 2020. CLEARING ACTIVITY

18,000 17,103 16,952 16,886 16,824 16,075 14,822 15,000

12,000 9,997

9,000

6,000

3,000

- Q1-2015 Q1-2016 Q1-2017 Q1-2018 Q1-2019 Q1-2020 Q1-2021

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

Week 17 April 19 - April 25, 2021 3 APRIL 19 - APRIL 25, 2021 WEEK 17

______SLOWDOWN IN THE ACTIVITY OF THE PROPERTY MARKET IN FIRST QUARTER OF 2021

The Lebanese real estate sector went back to being under stress during the first quarter of this year, following a positive performance in 2020 whereby the sector was perceived as a safe haven after the economic and financial developments in the country.

The latest official figures released by the General Directorate of Land Registry and Cadastre in Lebanon covering the first quarter of 2021 showed that realty markets reversed last year’s growth and reported a slump in property transactions and sales activity.

The number of sales operations retreated by a yearly 6.3% from 14,068 sales operations in the first quarter of 2020 to 13,182 operations in the first quarter of 2021. Moreover, the number of transactions retreated from 32,225 in the first quarter of 2020 to 27,043 in the same period of this year, a yearly decline of 16.1%.

Sales to foreigners contracted by 23.6% year-on-year to reach 172 operations in the first quarter of 2021.

The value of property sales transactions was also on a downward path in the first quarter of 2021. It posted a decline of 1.5% year-on-year to attain a total of US$ 2,300.3 million during the first quarter of 2021. The most significant movements coming were in Metn (-22.7%) and (-18.5%). The decrease of the number of sales operations at a faster rate than the value of sales pushed the average sales value up from US$ 166,015 in the first quarter of 2020 to US$ 174,503 in the first quarter of 2021.

Furthermore, property taxes followed the declining trend, retreating by a yearly 2.4% from US$ 98.9 million in the first three months of 2020 to US$ 96.5 million in the corresponding period of 2021.

PROPERTY MARKET (FIRST QUARTER OF EACH YEAR)

r l pri

1,000 1,01

1,000 1,95 1,11 1,0 1,000 12,9 1,12 12,0 12,000

10,000

,000

,000

,000

2,000

- 2015 2016 2017 2018 2019 2020 2021

l l ri illi

2,5000 2,9 2,55 2,00

2,0 20115 2,0000 1,22 1,251

1,5000

1,0000

5000

00 2015 2016 2017 2018 2019 2020 2021

Sources: Directorate of Land Registry and Cadastre, Bank Audi's Group Research Department

Week 17 April 19 - April 25, 2021 4 APRIL 19 - APRIL 25, 2021 WEEK 17

SURVEYS ______DE-TAXED TOURISTIC SPENDING DOWN BY A YEARLY 44% IN THE FIRST QUARTER OF 2021

As per Global Blue, the firm that reimburses VAT to tourists at Lebanese border points, purchases by tourists in Lebanon whose VAT was claimed and which gives a fair view about tourists’ shopping trends, contracted by 44% during the first quarter of 2021 compared to the same period of 2020. The number of transactions retreated by a yearly 79% in the first quarter of this year.

The distribution of spending by category shows that the biggest share of 70% is for fashion and clothing in which spending decreased by 24%, followed by watches and jewelry with 15% which reported a decline 75%, department stores with 7% (8% decline in spending), sports equipment and clothing with 3%, home and garden with 2%, all of which reported considerable declines in spending during the first quarter of 2021 compared to the same period of the previous year.

A breakdown of spending by country of residence shows that the highest share of total spending is by residents of UAE with 20% (26% decline in spending), followed by residents of Syria with 6% (72% retreat in spending), with 5% (71% decrease in spending), Egypt with 5% (49% decrease in spending), Kuwait with 3% (61% drop in spending) and with 2% (60% contraction in spending), knowing that all other countries reported significant yearly declines in the level of spending by their residents over the first quarter of 2021.

The breakdown of spending by Lebanese area shows that 59% of the purchases took place in Beirut, while 29% took place in the Metn area. The remaining was distributed among Baabda & Aley (10%), Kesserwan & Jbeil (1%) and other areas, over the first quarter of 2021.

EVOLUTION OF DE-TAXED TOURISTIC SPENDING BY COUNTRY OF RESIDENCE AND CATEGORY IN THE FIRST QUARTER OF 2021 EVOLUTION OF DE-TAXED TOURISTIC SPENDING BY COUNTRY OF RESIDENCE AND CATEGORY IN THE FIRST QUARTER OF 2021 EVOLUTION OF DE-TAXED TOURISTIC SPENDING BY COUNTRY OF RESIDENCE AND CATEGORY IN THE FIRST QUARTER OF 2021

r il, 1 A, 20 r il, 1 r rl i, 1 A, 20 Al, 10 r rl i, 1 Al, 10

ri, ri, , 29 , 29

r ri, 0 r ri, 0

i Ari, 5 i Ari, 5 ir, 59 ir, 59 p, 5 p, 5

i, i, r, 2 r, 2

Sources: Global Blue, Bank Audi's Group Research Department

Week 17 April 19 - April 25, 2021 5 APRIL 19 - APRIL 25, 2021 WEEK 17

______PROGRESS ON THE POLITICAL FRONT NEEDED FOR REAL PROGRESS ON THE ECONOMIC FRONT IN LEBANON, AS PER EMIRATES NBD

According to a recently released “Lebanon Outlook” by Emirates NBD, with no end in sight to Lebanon’s multiple crises, and an ongoing deterioration in many indicators, Emirates NBD have revised its real GDP growth outlook for 2021 from a weak expansion to another sizeable economic contraction at -4.7% – albeit far less than the -27.3% estimated for 2020.

There has been no positive news on the economic front since its last report, and in addition to the other challenges facing the economy – the financial crisis, the depreciation of the pound, the aftermath of the Beirut blast – the COVID-19 pandemic has also been weighing on activity, as per the report.

Lebanon imposed a new lockdown in January in a bid to curb rising case numbers, only easing it two months later, but the Easter weekend saw another shutdown, and another is planned for Eid al-Fitr. With celebrations for these two major events curbed, and ongoing restrictions on opening times for hospitality and leisure venues, private consumption levels will remain depressed.

In any case, the household purchasing power of the Lebanese has been seriously constrained by the ongoing collapse of the pound on the parallel market. While the official peg for the currency remains at LP 1,513/US$, in reality this level is being used for an increasingly diminished list of essential imports, as per Emirates NBD.

For ordinary Lebanese, the pound has fallen as low as LBP 12,150 at points in April. As a result, inflation averaged 84.3% year-on-year in 2020, hitting 145.9% in December, while food price inflation hit 402.1% the same month. The pound’s freefall did not really begin in earnest until April last year (following Lebanon’s first debt default in March), and with the currency continuing to tumble even now, inflation will remain very high over this year also – Emirates NBD forecasts an average of 55% year-on-year in 2021.

Even at the official exchange rate, Lebanon’s GDP per capita in US$ will have fallen by -21.9% by the end of this year compared with its level in 2019. At an exchange rate of LP 12,000/US$, that fall in GDP per capita is more like -90.0% in two years, to just US$ 1,200. Rising unemployment – as much as 40% at the close of 2020, with likely a large number of discouraged workers who have simply given up looking for employment under the present circumstances also – will also weigh on the economy, as per the report.

While the need for reconstruction of parts of Beirut will require sizeable investment, this is unlikely to be forthcoming under present circumstances. Construction sector indicators show an ongoing decline in activity through the course of 2020 (data up to October), and are unlikely to have picked up since.

With the currency unstable there will be few private international investors looking at Lebanon, and government funding such as that promised in Paris three years ago will be withheld until there is tangible reform progress. Meanwhile, the government’s ability to spend is constrained by its wide fiscal deficit and a worsening credit profile after its default last year as per Emirates NBD.

Until there is some progress on the political front, there can be little real progress on the economic front either – an effective government needs to be installed which can then start to implement the essential reforms that are a prerequisite of international aid and investment, which will be essential to Lebanon’s recovery, as per Emirates NBD. The street protests seen in March following the latest failure in negotiations indicate the social risks that are becoming more manifest as the stalemate continues.

Week 17 April 19 - April 25, 2021 6 APRIL 19 - APRIL 25, 2021 WEEK 17

CORPORATE NEWS ______FATTAL TO SELL PFIZER VACCINE TO COMPANIES STARTING IN JULY

Fattal Healthcare entered the discussion to make vaccines available to private sector companies for a fee. Fattal will be the second supplier following Malia Group that started offering Russia’s Sputnik V vaccine.

A US$ 24 covers two doses of vaccine per person without an extra charge. The payment will be made directly to MoPH, as said in a statement.

Fattal will act as an intermediary between the private sector and the Ministry of Public Health (MoPH). Once registration is complete with Fattal, a representative from MoPH will contact the recipient company to confirm the number of vaccines.

The prospective recipients should also be registered at MoPH’s Covax platform.

Vaccinations are scheduled to take place between July and August 2021.

______NEW ALLIANCE BETWEEN UAE'S ALEC AND LEBANON'S BUTEC TO TARGET INDUSTRIAL AND ENVIRONMENTAL PROJECTS

UAE-based general contractor ALEC and Lebanon-based design-build industrial contractor BUTEC launched a new joint venture which will target the region’s utilities, industrial and environmental sector- based projects.

The JV will consolidate respective strengths and expertise of the two partners while helping to streamline costs, as per a statement by ALEC.

______US STARTUP RAMP, CO-FOUNDED BY A LEBANESE, VALUED AT US$ 1.6 BILLION

The New York-based start-up Ramp, which was founded two years ago, joins the very small club of global unicorns, these young shoots valued at more than a billion dollars.

Ramp offers business payment cards and expense management software that allows the customer to reimburse a fraction of their expenses per card. It was valued at US$ 1.6 billion.

The new injection comes after two other fundraising campaigns that raised US$ 30 million in Series A and US$ 8 million from high-profile investors.

The company has thousands of customers wants to go further in decision support. The goal of the company is to help its users make the right financial decisions by giving them real-time access to their expenses and balance sheets.

On the long run, the company hopes to be able to automate certain decisions through artificial intelligence, said the Lebanese Co-founder.

______LEBANESE STARTUP OSTAZ (SYNKERS) ACQUIRED BY INSPIRED GROUP

The Lebanese start-up, Ostaz (formerly Synkers), an online tutoring platform, was acquired by Inspired Education Group, a network of schools created in London by a Lebanese-English businessman.

Inspire, which brings together more than 70 private institutions worldwide with 50,000 students and 2,000 teachers, bought the shares of the various investors but not the three founders who kept their positions within the company.

Week 17 April 19 - April 25, 2021 7 APRIL 19 - APRIL 25, 2021 WEEK 17

Ostaz was launched in 2017 that raised its first fund-raising with Phoenician Funds and from international and local investors.

The Lebanese start-up developed a mobile application that connects private tutors and students. It has more than 45,000 registered students and more than 65,000 hours of tutoring given by certified professors at the platform. The aim is to accompany learners on their academic journey, from college to university entrance exams to official exams (Baccalaureate, SAT, IELTS etc...).

Today Ostaz pertains about 20 employees in Lebanon and six in its offices in the Gulf. is the next step that Ostaz intends to develop with Inspired's well-established network.

______WAVE BETS ON ELECTRIC BIKES IN LEBANON

Wave e-bike, a new bike rental platform based in Beirut, plans to transform bikes from means of entertainment to means of transportation, as per Le Commerce du Levant.

The start-up offers electric bikes rental for a monthly subscription including against theft and breakdowns.

The bikes are made in Taiwan but designed in a way that they are adapted by Beirut city where it is quite hot during summer and there are many slopes. The electric model would support the cyclist provided that he chooses the engine according to his preferences and geographical factors taking into consideration the infrastructure conditions.

The electric bike’s endurance is for the 75 Kilowatts battery depends on the slopes and engines’ support.

Currently, Wave pertains 60 bikes for rent, 10 spare bikes in case of breakdown and five prototypes.

The start-up wants to expand its fleet to more than 1,000 bikes by 2022.

______SWITCHMED BACKS SUSTAINABLE FIRMS IN 5 MEDITERRANEAN COUNTRIES

TheSwitchers.org is an online platform that aims to stimulate sustainable entrepreneurship by supporting green startups in Tunisia, Spain, Italy, Lebanon and Egypt.

The platform is completely free and was developed as part of the SwitchMed program and funded by EU.

It will support entrepreneurs turning their business model ideas into successful green startups in the textiles and fashion industries in the partner countries of the ENI CBC MED program.

The platform enables interactions among entrepreneurs, business providers, mentors and financial institutions willing to develop novel business models in the green and circular economy.

TheSwitchers.org will provide its users with a unique set of methodologies and tools for sustainable business development, designed and digitalized by SCP/RAC to make them accessible to a wider audience.

It will also host the SwitchersFund, a platform that provides and facilitates direct funding and business support services to green entrepreneurs in the Mediterranean region, as well as the Switchers Community website where entrepreneurs who share a common passion for the environment can meet.

Week 17 April 19 - April 25, 2021 8 APRIL 19 - APRIL 25, 2021 WEEK 17

CAPITAL MARKETS ______MONEY MARKET: FURTHER WEEKLY CONTRACTIONS IN TOTAL RESIDENT DEPOSITS

The money market remained underpinned by abundant local currency liquidity following large LP money creation. This kept the overnight rate stable this week at 3%, noting that its official rate is quoted at 1.90%.

In parallel, the latest monetary aggregates released by the Central Bank of Lebanon for the week ending 8th of April 2021 showed that total resident banking deposits contracted further by LP 576 billion. This is mainly attributed to a LP 333 billion fall in total LP resident deposits amid a LP 258 billion drop in LP demand deposits and a LP 75 billion decline in LP saving deposits, while foreign currency resident deposits contracted by LP 243 billion (the equivalent of US$ 161 million as per the official rate of LP 1,507.5). Yet, the money supply in its largest sense (M4) expanded by LP 25 billion over the covered week amid a significant rise in currency in circulation by LP 741 billion. Within this context, it is worth mentioning that the currency in circulation expanded by LP 6,341 billion since the beginning of this year to reach LP 35,752 billion on April 8, 2021, and compared to a much lower level of LP 5,387 billion on October 17, 2019, when a new era started.

INTEREST RATES

23/04/21 16/04/21 31/12/20 Overnight rate (official) 1.90% 1.90% 1.90% 7 days rate 2.00% 2.00% 2.00% 1 month rate 2.75% 2.75% 2.75% ⬌ 45-day CDs 2.90% 2.90% 2.90% ⬌ 60-day CDs 3.08% 3.08% 3.08% ⬌ ⬌ ⬌ Source: Bloomberg ______TREASURY BILLS MARKET: NOMINAL WEEKLY SURPLUS OF LP 125 BILLION

The latest Treasury bills auction results for value date 22nd of April 2021 showed subscriptions in the six- month category (offering a yield of 4.0%), the three-year category (offering a coupon of 5.50%) and the seven-year category (offering a coupon of 6.50%).

In parallel, the Treasury bills auction results for value date 15th of April 2021 showed that total subscriptions amounted to LP 146 billion, distributed as follows: LP 8 billion in the three-month category (offering a yield of 3.50%), LP 106 billion in the one-year category (offering a yield of 4.50%) and LP 32 billion in the five-year category (offering a coupon of 6.0%). These compare to maturities of LP 21 billion, resulting into a nominal weekly surplus of LP 125 billion.

______FOREIGN EXCHANGE MARKET: BLACK MARKET RATE CONTINUES TO HOVER AROUND LP/ US$ 12,000

The black market exchange rate continued to hover around the LP/US$ 12,000 level during this week, reaching LP/US$ 12,175-LP/US$ 12,225 on Friday as compared to LP/US$ 12,200-LP/US$ 12,250 at the end of last week, while all eyes remained focused on the upcoming new FX platform (Sayrafa) aimed to increase the FX market efficiency and contain the excess of local currency liquidity, noting that its FX rate would be variable and subject to demand and supply forces.

Week 17 April 19 - April 25, 2021 9 APRIL 19 - APRIL 25, 2021 WEEK 17

TREASURY BILLS

23/04/21 16/04/21 31/12/20 3-month 3.50% 3.50% 3.50% 6-month 4.00% 4.00% 4.00% 1-year 4.50% 4.50% 4.50% ⬌ 2-year 5.00% 5.00% 5.00% ⬌ 3-year 5.50% 5.50% 5.50% ⬌ 5-year 6.00% 6.00% 6.00% ⬌ 7-year 6.50% - 6.50% ⬌ Nom. Subs. (LP billion) 146 122 ⬌ Short-term (3&6 mths) 8 - Medium-term (1&2 yrs) 106 - Long-term (3 yrs) - 20 Long-term (5 yrs) 32 - Long-term (7 yrs) - 102 Maturities 21 191 Nom. Surplus/Deficit 125 -69

Sources: Central Bank of Lebanon, Ministry of Finance

Amid dwindling FX reserves estimated currently below US$ 17 billion, Moody’s warned in a recent report that “encroaching on banks’ mandatory reserves held at the BDL amid a persistent government deadlock would increase banks’ counterparty risks, jeopardizing remaining correspondent banking relationships, further undermining access to cross-border payment services for remittances, trade and tourism, which are key pillars of the economy”.

EXCHANGE RATES

23/04/21 16/04/21 31/12/20 LP/US$ 1,507.50 1,507.50 1,507.50 LP/£ 2,091.66 2,074.02 2,048.54 LP/¥ 13.97 13.85 14.61 ⬌⬇ LP/SF 1,647.00 1,638.77 1,706.67 ⬇ LP/Can$ 1,207.64 1,204.55 1,178.66 ⬇ LP/Euro 1,818.05 1,805.68 1,851.21 ⬇ ⬇ Source: Bank Audi’s Group Research Department ______STOCK MARKET: BSE CONTINUES TO BENEFIT FROM INVESTOR INTEREST THIS WEEK

The continued to benefit from investor interest this week, as some market players sought to add Lebanese equities to their holdings on hedging against crisis. This was reflected by a 2.5% weekly rise in the BSE price index, which brought year-to-date price gains to 32.6%. Seven out of nine traded stocks registered price gains, while one stock posted price falls and one stock saw no price change week-on-week.

A closer look at individual stocks shows that BLOM’s GDRs led the advance on the BSE this week, posting a 16.4% surge in prices to reach US$ 3.84, followed by Preferred shares 2009 with +10.0%

Week 17 April 19 - April 25, 2021 10 APRIL 19 - APRIL 25, 2021 WEEK 17

to US$ 38.50, Byblos Bank’s “listed” shares with +4.9% to US$ 0.85, Bank Audi’s “listed” shares with +4.4% to US$ 2.61, Solidere “A” shares with +3.1% to US$ 24.74, Bank Audi’s GDRs with +2.8% to US$ 1.85 and Solidere “B” shares with +2.0% to US$ 24.44. In contrast, Holcim Liban’s share price retreated by 3.0% to US$ 15.90. Byblos Bank’s “listed” shares 2008 saw no price change week-on-week, standing at US$ 35.0. As far as trading volumes are concerned, the BSE total turnover increased by 14.9% week-on-week, moving from US$ 5.3 million last week to US$ 6.1 million, noting that Solidere shares continued to capture the lion’s share of activity (95.5%).

AUDI INDICES FOR BSE

22/1/96=100 23/04/21 16/04/21 31/12/20 Market Cap. Index 401.16 391.43 302.49 Trading Vol. Index 54.50 47.41 86.63 ⬆ Price Index 84.22 82.17 63.50 ⬆ Change % 2.49% 0.04% 4.60% ⬆ 23/04/21 16/04/21 31/12/20 ⬆ Market Cap. $m 9,517 9,286 7,176 No. of shares traded (Exc. BT) 320,916 432,205 650,340 ⬆ Value Traded $000 (Exc. BT) 6,097 5,306 5,834 ⬇ o.w. : Solidere 5,823 4,771 5,565 ⬆ Banks 274 471 264 ⬆ Others 0.2 64 5 ⬇ ⬇ Sources: Beirut Stock Exchange, Bank Audi’s Group Research Department

______BOND MARKET: SHY WEEKLY BOND PRICE RECOVERY

Lebanese Eurobonds registered a shy price recovery this week, mainly supported by some international demand across the curve, as some market players found a “good buy” in Lebanese sovereigns after their prices crashed to historical low levels. In details, Lebanese debt papers maturing between 2020 and 2037 posted price increases of 0.25 pt to 0.63 pt week-on-week to reach 11.75-12.50 cents per US dollar on Friday against 11.0-11.38 cents per US dollar at the end of last week. This helped reducing year-to-date bond price contractions to 0.88 pt-2.25 pts.

EUROBONDS INDICATORS

23/04/21 16/04/21 31/12/20 Total tradable size $m 32,364 32,364 32,364 o.w.: Sovereign bonds 31,314 31,314 31,314 Average Yield 73% 78% 57% ⬌ Average Life 6.77 6.78 7.04 ⬌⬇ Yield on US 5-year note 0.80% 0.81% 0.37% ⬇ ⬇

Source: Bank Audi’s Group Research Department

Week 17 April 19 - April 25, 2021 11 APRIL 19 - APRIL 25, 2021 WEEK 17

INTERNATIONAL MARKET INDICATORS

Weekly Year-to-date 23-Apr-21 16-Apr-21 31-Dec-20 change change EXCHANGE RATES YEN/$ 107.86 108.79 103.32 -0.9% 4.4% $/£ 1.388 1.383 1.367 0.3% 1.5% $/Euro 1.210 1.198 1.222 1.0% -1.0% STOCK INDICES DOW JONES INDUSTRIAL 34,043.49 34,200.67 30,606.48 -0.5% 11.2% AVERAGE S&P 500 4,180.17 4,185.47 3,756.07 -0.1% 11.3% NASDAQ 14,016.81 14,052.34 12,888.28 -0.3% 8.8% CAC 40 6,257.94 6,287.07 5,551.41 -0.5% 12.7% Xetra Dax 15,279.62 15,459.75 13,718.78 -1.2% 11.4% FT-SE 100 6,938.56 7,019.53 6,460.52 -1.2% 7.4% NIKKEI 225 29,020.63 29,683.37 27,444.17 -2.2% 5.7% COMMODITIES (in US$) GOLD OUNCE 1,777.20 1,776.51 1,898.36 0.0% -6.4% SILVER OUNCE 26.01 25.97 26.40 0.1% -1.5% BRENT CRUDE (per barrel) 66.11 66.77 51.80 -1.0% 27.6% LEADING INTEREST RATES (%) 1-month Libor 0.11 0.12 0.14 0.00 -0.03 US Prime Rate 3.25 3.25 3.25 0.00 0.00 US Discount Rate 0.25 0.25 0.25 0.00 0.00 US 10-year Bond 1.56 1.58 0.91 -0.02 0.65

Sources: Bloomberg, Bank Audi's Group Research Department

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Week 17 April 19 - April 25, 2021 12