The LEBANON WEEKLY MONITOR - mofcom.gov.cnimages.mofcom.gov.cn/lb/accessory/201210/1349773048007.pdf · Micky Chebli (961-1) 977419 [email protected] Nadine Akkawi (961-1)

1Week 40 September 24 - September 30, 2012

SEPTEMBER 24 - SEPTEMBER 30, 2012

WEEK 40

Bank Audi sal - Audi Saradar Group - Group Research Department - Bank Audi Plaza - Bab Idriss - PO Box 11-2560 - Lebanon - Tel: 961 1 994 000 - email: [email protected]

CONTACTS

RESEARCH

Treasury & Capital Markets

Micky Chebli(961-1) [email protected]

Nadine Akkawi(961-1) [email protected]

Bechara Serhal(961-1) [email protected]

Private Banking

Toufic Aouad(961-1) [email protected]

Corporate Banking

Khalil Debs(961-1) [email protected]

Marwan Barakat(961-1) [email protected]

Jamil Naayem(961-1) [email protected]

Salma Saad Baba(961-1) [email protected]

Fadi Kanso(961-1) [email protected]

Nathalie Ghorayeb(961-1) [email protected]

Sarah Borgi(961-1) [email protected]

Nivine Turyaki(961-1) [email protected]

LEBANON MARKETS: WEEK OF SEPTEMBER 24 - SEPTEMBER 30, 2012

The LEBANON WEEKLY MONITOR

Economy___________________________________________________________________________p.2 TRADE BALANCE INCREASINGLY BURDENED BY THE RISE IN IMPORTS AND THE DECLINE IN EXPORTS According to the Higher Customs Council’s statistics for the first eight months of 2012, Lebanon’s trade deficit widened at a considerably faster pace on account of a decline of exports coupled with an ongoing double-digit rise of imports. Also in this issuep.3 Total customs and VAT revenues up by 3.8% in the first eight months p.3 Imports of industrial machinery down by 10.6% in the first seven months p.4 Clearing activity slightly down by 0.5% year-on-year

Surveys___________________________________________________________________________p.5 CITI SAYS THAT LEBANON’S LOCAL GAS TO TRANSFORM ITS ECONOMIC WEALTH Citi issued its latest “Middle East Macro Monthly” in which it indicated that the recent significant off-shore gas finds is an important development that would boost the Lebanese economy. Also in this issuep.6 Lebanon’s credit ratings still vulnerable to the Syrian developments, as per S&P

Corporate News___________________________________________________________________________p.7 CREDIT LIBANAIS NET PROFITS UP BY 5.1% IN THE FIRST HALF OF 2012 Credit Libanais announced 2012 first half net profits of US$ 35.6 million, up by 5.1% from US$ 33.8 million in the same period of 2011.

Also in this issuep.7 BBAC’s net profits down by 2.6% to US$ 21.9 million in the first half of 2012p.8 First National Bank’s net profits at US$ 8.9 million in the first half of 2012

Markets In Brief___________________________________________________________________________p.9 FOREIGN DEMAND FOR EUROBONDS, GIVEN THEIR ATTRACTIVE YIELDS Lebanese capital markets saw this week FC-to-LP conversions on the FX market, an increase in activity on the equity market and a continuous foreign demand on the Eurobond market. In details, the FX market saw conversions in favor of the Lebanese Pound in order to pay employees’ wages at the end of the month. This drove the LP/US$ interbank rate down from LP 1,501-LP 1,504 last week to LP 1,501-LP 1,502 this week, and called for the Central Bank’s intervention on Wednesday and Friday as a buyer of the US Dollar surpluses at LP 1,501. On the equity market, the total trading value amounted to US$ 6.8 million versus US$ 2.7 million last week. The price index declined by 0.4%, bringing its year-to-date decline up to 4.7% despite BSE attractive market pricing ratios relative to regional bourses. As to the bond market, the foreign demand continued for the third consecutive week, given the attractiveness of Lebanese yields with respect to the country’s risk premium, while some local investors offered their papers. The average spread widened by 8 bps to 333 bps, and the five-year CDS spread rose by 20 bps, from 425-445 bps last week to 445-465 bps this week.



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ECONOMY_____________________________________________________________________________TRADE BALANCE INCREASINGLY BURDENED BY THE RISE IN IMPORTS AND THE DECLINE IN EXPORTS

According to the Higher Customs Council’s statistics for the first eight months of 2012, Lebanon’s trade deficit widened at a considerably faster pace on account of a decline of exports coupled with an ongoing double-digit rise of imports. As a matter of fact, the trade deficit went up by 19.1% year-on-year to reach US$ 11.6 billion in the first eight months of 2012, following a yearly rise of 6.2% posted in the same period of 2011.

Imports actually grew by 14.1% over the period, moving from US$ 12.6 billion in the first eight months of 2011 to US$ 14.4 billion in the same period of this year. While incoming merchandise is still managing to report an increase, its trend has been on a downward path since the first two months of 2012, thus revealing a local demand, be it for consumption or investment purposes, relatively impacted by the sporadic developments that Lebanon has been subjected to mainly since the month of May 2012.

In parallel, exports declined by 2.7% over the period, moving from US$ 2.9 billion in the first eight months of 2011 to US$ 2.8 billion in the same period of this year. It is noteworthy that the growth of total exports has been slowing down since the first two months of this year. Exports by land through Aboudieh, Arida, Masnaa and Kaa declined by 8.7% year-on-year in the first eight months of 2012. Also, exports through the Ports of Beirut, Tripoli and Saida went down by a cumulative 10.2% annually in the aforementioned period of this year. As to exports thought the Airport, they increased by a yearly 6.7% in the first eight months of 2012.

The breakdown of imports by country of origin shows that most of the inward merchandise during the first eight months of the year came from the US with 13.8% of the total, followed by Italy with 8.1% of the total, China with 8.0%, France with 7.3%, Germany with 5.5% and Turkey with 4.5% of total imports. In parallel, Lebanon’s export partners during the first eight months of 2012 were as follows: Switzerland (11.5% of the total), KSA (8.6%), UAE (8.5%), Syria (5.8%) and Iraq (4.4%).

Sources: Higher Customs Council, Bank Audi's Group Research Department

TRADE ACTIVITY



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_____________________________________________________________________________TOTAL CUSTOMS AND VAT REVENUES UP BY 3.8% IN THE FIRST EIGHT MONTHS

Figures released by the Higher Customs Council indicate that customs revenues reached US$ 1,034.2 million in the first eight months of 2012, up by 4.4% from US$ 990.9 million posted in the same period of 2011. Revenues from the value-added tax were at US$ 1,000.6 million in the aforementioned period of 2012, up by 3.2% relative to US$ 969.1 million recorded over the same period of last year.

Overall customs receipts reached US$ 2,034.8 million in the first eight months of 2012, up by 3.8% from US$ 1,960.0 million posted in the same period of 2012. The Port of Beirut accounted for 83.6% of the total, followed by Rafic Hariri International Airport with 8.2%, the Masnaa crossing point with 3.5% and the Port of Tripoli with 3.4% of the total.

Sources: Higher Customs Council, Bank Audi's Group Research Department

OVERALL CUSTOMS RECEIPTS (US$ MILLION, FIRST 8M OF THE YEAR)

_____________________________________________________________________________IMPORTS OF INDUSTRIAL MACHINERY DOWN BY 10.6% IN THE FIRST SEVEN MONTHS

According to the statistics released by the Ministry of Industry, imports of industrial machinery, an indicator of investments made in the industrial sector, amounted to US$ 172.2 million during the first seven months of 2012, down by 10.6% from the same period of 2011. The decline in the value of imports of industrial machinery indicates a relative slowdown in the industrial sector whereby investors are displaying a weaker appetite for risk and have therefore reduced their demand for industrial machinery.

The distribution of the imported machinery by country of origin in the first seven months of 2012 shows that the bulk of industrial imports came from Italy with a total of US$ 39.5 million and accounting for about 22.9% of all imports. China came second with US$ 29.6 million or 17.2% of the total, followed by Germany with US$ 21.1 million (12.2% of total imports), and the United States with US$ 10.1 million (5.9% of total imports).



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

Sources: Ministry of Industry, Bank Audi's Group Research Department

CLEARED CHECKS (IN US$ MILLION, FIRST EIGHT MONTHS OF THE YEAR)

BREAKDOWN OF IMPORTS OF INDUSTRIAL MACHINERY BY COUNTRY (FIRST 7M OF 2012)

_____________________________________________________________________________CLEARING ACTIVITY SLIGHTLY DOWN BY 0.5% YEAR-ON-YEAR

The value of cleared checks in the banking system, a coincident indicator of overall consumption and investment patterns in the economy, pointed to a practical standstill in spending levels during the first eight months of 2012. In fact, the value of total cleared checks went slightly down by a yearly 0.5% during the aforementioned period of this year, compared to an increase of 3.6% in the same period of 2011.

In details, the value of cleared checks amounted to US$ 47.2 billion during the first eight months of 2012, against a total of US$ 47.4 billion posted in the same period of 2011. A breakdown by currency shows that banks’ clearings in Lebanese Pounds amounted to LP 14,724 billion, up by 3.3% from the first eight months of 2011, while those in US dollars amounted to US$ 37,376 million, down by 1.5% over the same period.

The decline in the value of cleared checks in foreign currency, coupled with a rise in that of LP denominated checks led to a small contraction in the dollarization of cleared checks from 80% in the first eight months of 2011 to 79.3% in the same period of this year.



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SURVEYS_____________________________________________________________________________CITI SAYS THAT LEBANON’S LOCAL GAS TO TRANSFORM ITS ECONOMIC WEALTH

Citi issued its latest “Middle East Macro Monthly” in which it indicated that the recent significant off-shore gas finds is an important development that would boost the Lebanese economy.

Indeed, seismic surveys of the country’s territorial waters suggested the presence of 12 trillion cubic feet of gas, as per Citi. This number is expected to go up substantially as the testing has only covered half of Lebanon’s exclusive economic zone (EEZ) and does not include areas pending a final settlement of territorial dispute between Lebanon and neighbouring countries.

According to Citi, energy independence could transform Lebanon’s fiscal and economic picture drastically. Indeed, in the past five years, the country has spent over US$ 21 billion on fuel imports. Transfers to “Electricité du Liban” (EDL), to compensate for losses on electricity generation, have cost the budget between 4% and 5% of GDP. In addition, cheap gas could end the heavy reliance on costly diesel generators, estimated at 38% of private electricity consumption.

In fact, the need to rely on private generators acts as a major deterrent to investment in Lebanon dragging economic growth down by an estimate of 1.5% per year. However, one should note that the issues that plague the energy sector in Lebanon go beyond access to cheap gas. Hence, a comprehensive reform of the sector is required, including an investment in generation capacity, in production and distribution efficiency, as well as regulatory and tariff structure, as per Citi.

Regarding the banking sector, according to Citi, all indicators point to continued stability despite sporadic political developments. In this regard, the growth of non-resident deposits remained positive, although weaker, while dollarization and the premium paid on Lebanese pounds are both still stable. Lebanon’s sovereign credit dynamics depend on the ability and willingness of the banking sector to support the government’s debt issuance, and hence depend on the banking sector’s liquidity. Regarding inflation rate, it has shot up dramatically as a result of a technical adjustment where a 44% one–off upward adjustment was made to the cost of housing (that has been kept stable since June 2010). As a result, after averaging just 3.5% in the first half of the year, July and August inflation stood at 8.9% and 9.3% respectively. In Citi’s view, this distortion of the figures brought into question the value of CPI as an indicator, where its accuracy was already questioned by consumer groups. The report says that

Sources: Citi, Bank Audi's Group Research Department

LEBANON'S ECONOMIC INDICATORS



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rising global food costs, energy prices, and a public sector wage hike put upward pressure on prices, all of which are not reflected in official statistics.

Finally, the report considers fears of spillovers from Syria to remain a key challenge to Lebanon’s internal stability._____________________________________________________________________________LEBANON’S CREDIT RATINGS STILL VULNERABLE TO THE SYRIAN DEVELOPMENTS, AS PER S&P

According to Standard and Poor’s, the ongoing conflicts in Syria might increase the credit rating risks of Lebanon, as well as those of Jordan, Turkey, and Israel. As a matter of fact, the tensions in the country are creating geopolitical woes, refugee flows, trade restrictions and possible spillover effects, as per the rating agency.

Amongst the aforementioned countries, S&P considers Lebanon to be the most exposed to the Syrian situation given its close political and economic links with its neighbor.

First, the Syrian conflict might impact Lebanon’s external position through trade linkages given the fact that Syria is a relatively more important market for Lebanese products than it is for Jordan. It is noteworthy that Syria is ranked amongst the top five export markets for Lebanon during the first eight months of 2012.

Second, pertaining to the fiscal risks, the Syrian situation is creating downward pressures on tax revenues and thus somewhat straining public finances. In parallel, depending on the length and scale of conflicts, Lebanon might be one of the countries to become a longer residency for Syrian refugees. Hence, this would represent a financial burden for the government, and as Lebanese fiscal resources are relatively lower than the other aforesaid countries, the impact on public finances is considerable, as per S&P.

Third is political risk. Indeed, S&P indicated that the Syrian conflict is weighing down on policy-making in Lebanon, and consequently on political institutions across the country.

Yet, S&P’s base scenario is that the Syrian conflict will remain predominantly contained within its borders. However, this assessment could change should the conflict escalate beyond the rating agency’s expectations. In May of this year, S&P revised the outlook on Lebanon to “negative” from “stable” citing its acute exposure to developments in Syria. Yet, it affirmed the long and short-term ratings reflecting its view of the country’s political and macroeconomic resilience. Indeed, it has withstood both domestic and geopolitical turmoil in recent years, with its banking system and external position remaining as key rating strengths.

Sources: Standard and Poor's, Bank Audi's Group Research Department

POTENTIAL IMPACT OF SYRIAN DEVELOPMENTS ON LEBANON



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CORPORATE NEWS_____________________________________________________________________________CREDIT LIBANAIS NET PROFITS UP BY 5.1% IN THE FIRST HALF OF 2012

Credit Libanais announced 2012 first half net profits of US$ 35.6 million, up by 5.1% from US$ 33.8 million in the same period of 2011. Net interest income amounted to US$ 63.3 million in the aforementioned period of 2012, rising by 2.0% from US$ 62.0 million recorded in the same period of 2011. Net fees and commissions income increased from US$ 13.3 million to US$ 17.1 million respectively.

Net operating income edged up 9.6% to attain US$ 90.2 million in the first half of 2012, compared with US$ 82.3 million in the first half of 2011. Total operating expenses rose by 14.7% year-on-year to US$ 50.8 million in the first six months of 2012, of which staff expenses reaching US$ 29.7 million, 14.9% higher than those reported in the same period of 2011, and other administrative expenses reaching US$ 17.6 million, 12.4% higher than those of the first half of 2011.

Credit Libanais assets totaled US$ 7.5 billion at end-June 2012, up by 4.2% from US$ 7.2 billion at end-2011. Net loans and advances stood at US$ 2.1 billion at end-June 2012, 7.8% higher than the total of US$ 2.0 billion at end-2011. Customers’ deposits amounted to US$ 6.5 billion, up by 3.9% from US$ 6.3 billion at end-2011. Shareholders’ equity totaled US$ 511.5 million at end-June 2012, up by 4.7% from US$ 488.7 million at end-2011.

It is worth noting that Credit Libanais' interest margin declined from 1.98% in the first half of 2011 to 1.84% in the same period of this year. Non interest income to total income increased from 23.9% in the first six months of 2011 to 28.7% in the corresponding period of this year. Consequently, the return on average equity went up from 12.7% to 13.3% respectively.

_____________________________________________________________________________BBAC’S NET PROFITS DOWN BY 2.6% TO US$ 21.9 MILLION IN THE FIRST HALF OF 2012

BBAC's 2012 first half net profits reached US$ 21.9 million, declining by 2.6% from a total of US$ 22.5 million recorded in the same period of 2011. Net interest income amounted to US$ 39.9 million in the aforementioned period of 2012, rising by 23.0% from US$ 32.4 million recorded in the same period of 2011. Net fees and commissions income increased from US$ 7.9 million in the first half of 2011 to US$ 8.6 million in the same period of 2012.

Total operating expenses rose by 11.2% year-on-year to US$ 31.0 million in the first six months of 2012, of which staff expenses reaching US$ 16.5 million, 14.0% higher than those reported in the same period of 2011, and other administrative expenses reaching US$ 13.2 million, 8.5% higher than those of the first

CREDIT LIBANAIS MAJOR FINANCIAL AGGREGATES

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



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half of 2011. It is worth mentioning that BBAC's cost to income ratio declined from 57.6% in the first half of 2011 to 56.4% in the same period of this year.

BBAC’s assets totaled US$ 4.6 billion at end-June 2012, up by 5.4% from US$ 4.3 billion at end-2011. Net loans and advances stood at US$ 1.2 billion at end-June 2012, 7.0% higher than the total of US$ 1.1 billion at end-2011. Customers’ deposits amounted to US$ 4.0 billion, up by 5.4% from US$ 3.8 billion at end-2011. Asset quality has improved as reflected by the NPL to gross loans ratio which declined from 6.5% in the first half of 2011 to 5.8% in the same period of this year.

BBAC's interest margin reported an increase from 1.6% in the first half of 2011 to 1.9% in the same period of this year. Yet, its non interest income to total income declined from 33.1% to 27.2% respectively. Hence, its return on average assets declined from 1.07% in the first half of 2011 to 0.99% in the first half of 2012.

_____________________________________________________________________________FIRST NATIONAL BANK’S NET PROFITS AT US$ 8.9 MILLION IN THE FIRST HALF OF 2012

First National Bank announced 2012 first half net profits of US$ 8.9 million, up by 13.5% from US$ 7.8 million in the same period of 2011. Net interest income amounted to US$ 27.3 million in the aforementioned period of 2012, rising from US$ 19.4 million in the same period of 2011. Net fees and commissions income decreased from US$ 2.7 million in the first half of 2011 to US$ 2.2 million in the same period of 2012.

Net operating income edged up 14.2% to attain US$ 31.3 million in the first half of 2012, compared with US$ 27.4 million in the first half of 2011. Total operating expenses rose by 17.6% year-on-year to US$ 20.9 million in the first six months of 2012, of which staff expenses reaching US$ 11.3 million, 8.3% higher than those reported in the same period of 2011, and other administrative expenses reaching US$ 8.3 million, 34.8% higher than those of the first half of 2011.

First National Bank’s assets totaled US$ 3.1 billion at end-June 2012, up by 10.4% from US$ 2.8 billion at end-2011. Net loans and advances stood at US$ 836.5 million at end-June 2012, 7.4% higher than the total of US$ 779.2 million at end-2011. Customers’ deposits amounted to US$ 2.5 billion, up by 9.2% from US$ 2.3 billion at end-2011. Shareholders’ equity totaled US$ 198.0 million at end-June 2012, up by 10.5% from US$ 179.1 million at end-2011.

First National Bank's NPL to gross loans ratio went down from 8.7% in the first half of 2011 to 8.5% in the same period of this year. Its coverage ratio improved from 85.9% to 89.2% over the same period. Also, collective provisions to net loans declined from 1.4% in the first half of 2011 to 1.1% in the corresponding period of 2012.

BBAC'S MAJOR FINANCIAL AGGREGATES

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



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CAPITAL MARKETS_____________________________________________________________________________MONEY MARKET: DECLINE IN LP DEPOSITS, RISE IN FX DEPOSITS

The money market maintained its calm mood during this week, within the context of ample local currency liquidity at hand. Accordingly, the overnight rate remained stable at its low official level of 2.75% set by the Central Bank of Lebanon. As to Certificates of Deposits, the Central Bank of Lebanon sold this week LP 3 billion in the 60-day category. Accordingly, total subscriptions since the beginning of the year 2012 stood at LP 587 billion and were distributed as follows: LP 34 billion in the 45-day category and LP 553 billion in the 60-day category. Interest rates on the 45-day and 60-day CDs categories remained stable at 3.57% and 3.85% respectively.

At the monetary aggregates level, figures for the week ending 13th of September 2012 released this week showed a decline in local currency deposits of LP 46 billion, as a result of a rise of LP 62 billion in LP time deposits and a decrease of LP 108 billion in LP demand deposits week-on-week. Deposits in foreign currencies surged by US$ 303 million. These weekly variations compare to an average weekly increase of LP 121 billion for LP deposits, and an average weekly rise of US$ 34 million for foreign currency deposits since the beginning of the year 2012. Total money supply in its large sense (M4) expanded by LP 292 billion week-on-week. This compared to an average weekly growth of LP 183 billion since the beginning of the year.

On a cumulative basis, money supply in its large sense (M4) grew by LP 8,330 billion since the beginning of the year 2012. This is the result of a rise in local currency denominated time deposits of LP 5,875 billion, an increase in foreign currency deposits of LP 2,375 billion (the equivalent of US$ 1,576 million), a contraction in money supply (M1) of LP 172 billion, and a growth in Treasury bills held by the public of LP 252 billion.

_____________________________________________________________________________TREASURY BILLS MARKET: NOMINAL SURPLUS OF LP 603 BILLION

The secondary Treasury bills market saw some activity on papers maturing in 2013, 2014 and 2016, given the ample local currency liquidity at hand. In parallel, the latest auction’s results (September 27, 2012) continued to show stability in the average yields on the three-month, six-month and five-year categories at 4.44%, 4.99% and 6.74% respectively.

On the other hand, the auction results for value date 20th of September, 2012 released by the Central Bank of Lebanon showed that total subscriptions amounted to LP 1,374 billion and were distributed as follows: LP 4 billion in the one-year category, LP 2 billion in the two-year category, LP 217 billion in the three-year category, and LP 1,151 billion in the 10-year category. These compare to maturities of LP 771 billion, resulting in a nominal surplus of LP 603 billion. Within this context, it is worth mentioning that this is the first time that the Ministry of Finance issues a 10-year Tbs category, and the rate offered on this category (8.24%) is the highest provided in the market since July 2009.

INTEREST RATES

Source: Bloomberg



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TREASURY BILLS

Sources: Central Bank of Lebanon, Bloomberg

_____________________________________________________________________________FOREIGN EXCHANGE MARKET: FC-TO-LP CONVERSIONS

The foreign exchange market saw FC-to-LP conversions in order to pay employees’ wages towards the end of the month. This drove the LP/US$ interbank rate down from LP 1,503- LP 1,505 at the beginning of the week to LP 1,501-LP 1,502 at the end of the week. Within this context, the Central Bank of Lebanon intervened on Wednesday and Friday as a buyer of the green currency surpluses at the lower end of its intervention bracket (LP 1,501).

The Central Bank’s foreign assets hit US$ 35.1 billion at mid-September 2012, moving up by US$ 2.9 billion since year-end 2011, mainly driven by some FC-to-LP conversions and the swapping of the equivalent of US$ 2 billion of LP Treasury bills held by the Central Bank into new Eurobonds issued by the Treasury. As a result, the BDL’s foreign assets coverage ratio to LP money supply rose from 82.9% at end-2011 to 85.2% at mid-September 2012.

EXCHANGE RATES

Source: Bank Audi’s Group Research Department_____________________________________________________________________________STOCK MARKET: 0.4% DECLINE IN PRICE INDEX

The Beirut Stock Exchange was relatively active during this week. The total trading value amounted to US$ 6.8 million versus US$ 2.7 million last week and an average weekly trading value of US$ 8.5 million since the beginning of the year 2012. The average daily trading value went up from US$ 532 thousand last week to US$ 1,362 thousand this week, which resulted into a staggering rise in the trading volume index of 156.2% to reach 56.91. As far as prices are concerned, the BSE price index declined by 0.4% to close at 105.15.



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EUROBONDS INDICATORS

Source: Bank Audi’s Group Research Department

The banking shares captured 64.8% of the total trading value. Bank Audi’s “listed” share price declined by 0.9% to close at US$ 5.50, and Bank Audi’s GDR price fell by 3.7% to US$ 5.52. BLOM’s “listed” share price remained unchanged at US$ 7.40. BLOM’s GDR price went up by 1.3% to US$ 7.80. Byblos Bank’s “listed” share price increased by 0.7% to close at US$ 1.50. Solidere shares accounted for 31.3% of activity. Solidere “A” share price shed 1.6% to US$ 12.61, and Solidere “B” share price declined by 1.0% to close at US$ 12.54. As to industrial stocks, Holcim’s share price increased by 1.0% to US$ 15.51. Rymco’s share price stood unchanged at US$ 2.20.

All in all, the Beirut Stock Exchange performed similarly to other emerging and Arabian markets, as reflected by a 0.3% decline in the S&P Emerging Market Composite Index and a 0.9% decrease in the S&P Pan-Arab Composite Index.

On a cumulative basis, the total trading value amounted to US$ 333 million during the first nine months of 2012 as compared to US$ 444 million during the corresponding period of 2011. The total turnover ratio, measured by the annualized trading value to market capitalization, stood at 4.6% during the first nine months of 2012 versus 5.8% during the corresponding period of 2011, which spots light on the slowdown in activity on the BSE.

AUDI INDICES FOR BSE

Sources: Beirut Stock Exchange, Bank Audi’s Group Research Department_____________________________________________________________________________BOND MARKET: EXPANSION IN SPREADS

The Eurobond market saw continuous foreign demand for long-term papers that was met by adequate local offer at relatively high prices. In parallel, some local investors showed a buying interest in Lebanese debt papers during this week, within the context of the commercial banks’ high level of FC primary liquidity that reached circa US$ 36.5 billion at end-July 2012. The average yield remained unchanged at 4.22%, while the average spread widened by 8 bps to reach 333 bps, mainly due to stability in Lebanese yields and decline in international benchmark yields. For instance, the five-year US Treasuries yield declined from 0.69% to 0.64%. As to the cost of insuring debt, Lebanon’s five-year CDS spread rose from 425-445 basis points on average last week to 445-465 basis points on average this week.



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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 Audi Saradar Group 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.

Documents

The LEBANON WEEKLY MONITOR - mofcom.gov.cnimages.mofcom.gov.cn/lb/accessory/201210/1349773048007.pdf · Micky Chebli (961-1) 977419 [email protected] Nadine Akkawi (961-1)