Weekly Market Watch Economic Research Unit · 2016-10-24 · Economic Research Unit Credit Libanais Headquarters Adlieh Beirut, Lebanon Tel +961.1.608000 Fax +96.1.608231 [email protected]

EconomicResearchUnitCreditLibanaisHeadquarters

AdliehBeirut,[email protected]

CREDIT LIBANAIS S.A.L.

WeeklyMarketWatch

IssueNo.522

October15th–October21st2016

LLEEBBAANNOONN NEWS

ECONOMIC INSIGHTS

> IMF Releases its “October 2016 Regional Economic Outlook” Report for the Middle East & Central Asia Region 1

> Lebanon’s Technical Assistance Reaches 35.5 Person Weeks in FY 2016 2

> Lebanon Ranks Second to Last in Mena Region in the 2016 Rule of Law Index 3

> Lebanon Hosts Highest Number of Insurance Companies in the MENA Region in 2015 4

> Lebanon Receives $878.59 Thousand Under the UNDP’s Thematic Trust Funds in 2015 5

> Occupancy Rate in Lebanon’s Hospitality Sector at 70% in September 2016 6

> Construction Permits at an Eight-Year Low as of September 2016 7

> Commercial Banks’ Assets up at $195.77 Billion by August 2016 8

> Gross Public Debt at $74.04 Billion at End of August 2016 9 > Opened Letters of Credits Drop by 19.03% Y-O-Y by August

2016 10 > Net Foreign Assets of the Lebanese Financial Sector Register

First Cumulative Surplus Since 25 Months 11 > Weighted Average Interest Rate on LBP Deposits at 5.56% in

August 2016 11 > Consolidated assets of Financial Institutions at $1.59 Billion by

End of August 2016 12 > Cement Deliveries up by 8.18% Y-O-Y by August 2016 13 > The Coincident Indicator Increases by 6.75% Y-O-Y in August

2016 13 > Lebanon CPI Conveys an Annual Inflation of 1.03% in

September 2016 14 > Reserves at BDL Reach $52.36 Billion as at Mid-October 2016 15 > Tripoli Port Activity Improves by 7.34% Y-O-Y by August 2016 16 CORPORATE NEWS

> BSE Approves the Listing of Additional BLC Bank Common Shares and Series “D” Preferred Shares 17

MONETARY PERFORMANCE

> Monetary Aggregates 18 > Money Markets 18 LEBANESE EQUITIES

> Lebanese Equities & Credit Libanais Indices 19

Lebanon's Economic & Financial Sector Indicators 21 Lebanon's Ratings 22

IMF RELEASES ITS “OCTOBER 2016 REGIONAL ECONOMIC OUTLOOK” REPORT FOR THE MIDDLE EAST & CENTRAL ASIA REGION

The IMF released its “October 2016 Regional Economic Outlook Report” in which it projected Lebanon’s economic growth to remain flat at 1.0% in the year 2016 and to improve to 2.0% in 2017. LEBANON’S TECHNICAL ASSISTANCE REACHES 35.5 PERSON WEEKS IN FY 2016

According to the IMF’s “Middle East Regional Technical Assistance Center (METAC)” report, Lebanon’s technical assistance, measured in terms of person weeks, reached 35.5 in 2016, compared to 235 person weeks for the entire Middle East region. LEBANON RANKS SECOND TO LAST IN MENA REGION IN THE 2016 RULE OF LAW INDEX

Lebanon ranked 89th in the world in the Rule of Law index with a score of 0.46, and came in 6th among 7 MENA countries covered by the World Justice Program and 33rd amongst 37 covered upper middle income countries in the concerned index. LEBANON HOSTS HIGHEST NUMBER OF INSURANCE COMPANIES IN THE MENA REGION IN 2015

Lebanon houses the largest number of insurance companies (50) in the MENA region, followed by the KSA (34) and the UAE (32) according to “Al Bayan Economic” magazine’s “MENA Insurers, Reinsurers and Reinsurance Brokers 2015 Ranking”.

TABLE OF CONTENTS

Weekly Market Watch

ECONOMIC RESEARCH UNIT - ADLIEH, BEIRUT LEBANON - TEL: 01-608000 FAX: 01-608231

"BDL" Banque Du Liban "ABL" Association of Banks in Lebanon "MOF" The Lebanese Ministry of

Finance "BOP" Balance of Payment "IMF" The International Monetary Fund "Moody's" Moody's Investors Service "BSE" Beirut Stock Exchange "GDRs" Global Depositary Receipts "M1" Currency in Circulation + Demand

Deposits in LBP "M2" M1 + Other Deposits in LBP "M3" M2 + Deposits in Foreign Currencies "M4" M3+ Treasury Bills Held By Non Banking System, Including Accrued

Interests "CPI" Consumer Price Index "PPI" Producer Price Index "CLASI" Credit Libanais Aggregate Stock Index "CLFI" Credit Libanais Financial Sector Stock Index

"CLCI" Credit Libanais Construction Sector Stock Index “EIU” Economist Intelligence Unit “EOY” End of Year "P/E" Price to Earnings Multiple "P/BV" Price to Book Multiple "YTD" Year To Date "YTD Price Performance" Yield to Date Price Appreciation

"Forex" Foreign Exchange "LBP" The Lebanese Pound "USD" The United States Dollar "Yen" The Japanese Yen "GBP" The British Pound/ Sterling Pound "CHF" The Swiss Franc "Y-O-Y" Year-On-Year "GDP" Gross Domestic Product "MENA" Middle East and North Africa

“LE” Livre Egyptienne – Egyptian Pound

“SAR” Saudi Arabian Riyal “AED” United Arab Emirates Dirham “BD” Bahraini Dinar

SYNOPSIS OF TERMS

Weekly Market Watch

ECONOMIC RESEARCH UNIT - ADLIEH, BEIRUT LEBANON - TEL: 01-608000 FAX: 01-608231

LEBANON NEWS

Weekly Market Watch

SOURCE: IMF, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 1

IMF RELEASES ITS “OCTOBER 2016 REGIONAL ECONOMIC OUTLOOK” REPORT FOR THE MIDDLE EAST & CENTRAL ASIA REGION

The IMF released its “October 2016 Regional Economic Outlook Report” this week in which it expects the economic performance of the Middle East, North Africa, Afghanistan, and Pakistan (MENAP) region to remain hindered by the prevailing uncertainties across many of its turbulent countries (such as Syria, Iraq, Libya, and Yemen) and the repercussions of the latest drop in international oil prices. More specifically, the report unveiled that oil-exporting countries continue to bear the consequences of the drop in hydrocarbon prices on their economies, with fiscal tightening and shrinking liquidity levels in several GCC countries hampering their non-oil growth. The report pinpointed, however, the increase in the GCC’s hydrocarbon output and authorities’ notable efforts with regards to gradually lowering their respective countries’ fiscal deficits whereby the UAE, Kuwait, and Iraq are expected to record budget surpluses by the year 2021. In this perspective, the IMF suggested a set of measures for oil-exporting countries to adopt, of which speeding-up structural reforms geared towards diversifying the related economies away from the hydrocarbon sector, enhancing the role of the private sector, creating new job opportunities, and upgrading education and training programs to respond to the market needs. On the other hand, the economic outlook surrounding oil-importing countries is rather dull despite the multitude of factors which should have normally bolstered their economic performance, namely the implementation of various economic reforms, the progress in macroeconomic stability pursuant to the drop in oil prices, and higher external demand, especially from Europe. The IMF’s grim picture for oil importers owes primarily to persistent structural constraints, the sluggish improvement in job creation and living standards, and the sustained political uncertainties. In figures, the IMF projected economic growth for the MENAP region to reach 3.4% in each of the years 2016 and 2017, compared to 2.3% in 2015. Concurrently, the report anticipated economic growth for the Middle East & North Africa (MENA) region to slightly underperform that of the MENAP region during the next two years, projected at 3.2% in each of 2016 and 2017. On the other hand, the IMF’s expectations show that economic growth in the GCC countries is likely to decelerate from 3.4% in 2015 to 1.7% in 2016 before accelerating to 2.3% in 2017.

On a local basis, the IMF considered that confidence in the Lebanese economy continues to be strained by the lack of consensus between the country’s various political factions. The report also stated that the ongoing inflow of refugees to the Lebanese territories has been adding pressure on the country’s infrastructure and its education and health sectors. In addition, the IMF saw very little room to increase public spending given the government’s frail revenues, sizeable public wage expenditures, and high debt service. In this context, it projected Lebanon’s economic growth to remain flat at 1.0% in the year 2016 and to improve to 2.0% in 2017. In parallel, the report foresaw a rebound in inflation to -0.7% in 2016 and a positive 2.0% in 2017. In a related note, the IMF anticipated Lebanon’s current account deficit to narrow from 21.0% of GDP in 2015 to 20.4% in 2016 before slightly increasing to 20.6% in 2017. On the public finance front, fiscal deficit expressed as a percentage of GDP is projected to widen from 7.4% in 2015 to 8.1% in 2016 and a much higher 9.5% in 2017.

2013 2014 2015 2016F 2017F

Real GDP Growth (%)MENA 2.2 2.6 2.1 3.2 3.2MENAP 2.4 2.7 2.3 3.4 3.4MENAP Oil-Exporting Countries 2.0 2.7 1.6 3.3 2.9GCC Countries 3.1 3.3 3.4 1.7 2.3MENAP Oil-Importing Countries 3.2 2.9 3.8 3.6 4.2Lebanon 2.5 2.0 1.0 1.0 2.0

Inflation (%)MENA 10.3 6.8 6.1 6.0 6.2MENAP 10.0 6.9 5.9 5.6 6.1MENAP Oil-Exporting Countries 10.4 5.8 5.5 4.7 4.2GCC Countries 2.8 2.6 2.5 3.6 2.6MENAP Oil-Importing Countries 9.1 9.4 6.6 7.4 9.8Lebanon 4.8 1.9 -3.7 -0.7 2.0Current Account Balance (% of GDP)MENA 10.9 5.6 -4.4 -5.0 -2.8MENAP 10.1 5.1 -4.0 -4.6 -2.6MENAP Oil-Exporting Countries 15.1 8.3 -3.8 -4.4 -1.8GCC Countries 21.4 13.6 -2.4 -3.7 -0.5MENAP Oil-Importing Countries -5.1 -4.4 -4.5 -4.8 -4.7Lebanon -26.7 -28.1 -21.0 -20.4 -20.6Overall Fiscal Balance (% of GDP)MENA 0.9 -2.7 -9.3 -9.1 -6.4MENAP 0.0 -2.9 -8.8 -8.5 -6.0MENAP Oil-Exporting Countries 4.3 -0.7 -9.5 -9.2 -6.2GCC Countries 10.8 3.1 -9.4 -9.8 -6.9MENAP Oil-Importing Countries -9.4 -7.8 -7.3 -7.0 -5.8Lebanon1 -8.7 -6.0 -7.4 -8.1 -9.51- Central Government

Source: IM F, Credit Libanais Economic Research Unit

LEBANON NEWS

Weekly Market Watch

SOURCE: IMF, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 2

LEBANON’S TECHNICAL ASSISTANCE REACHES 35.5 PERSON WEEKS IN FY 2016

The International Monetary Fund (IMF) released its latest “Middle East Regional Technical Assistance Center (METAC)” report in which it sheds light on METAC’s technical assistance to the Middle East region during the fiscal year (FY) 2016. According to the report, Lebanon’s technical assistance, measured in terms of person weeks, reached 35.5 in 2016, compared to 235 person weeks for the entire Middle East region. The bulk of technical assistance to Lebanon was geared towards “Banking Supervision”, which accounted for 33.80% (12.0 person weeks) of total assistance, followed by “Revenue Administration” (29.58%, <10.5 person weeks>), “Public Financial Management” (28.17%, <10.0 person weeks>), and “Statistics” (8.45%, <3.0 person weeks>). It is worth noting that Lebanon came in fourth in the list of recipients of METAC’s technical assistance, accounting for 15.11% of total assistance extended to the Middle East region in FY 2016, preceded by Jordan (15.32%, <36.0 person weeks>), Sudan (18.09%, <42.5 person weeks>), and Egypt (21.28%, <50.0 person weeks>). On the other hand, Lebanon was followed by Iraq (8.94%, <21.0 person weeks>) and the West Bank & Gaza (8.09%, <19.0 person weeks>), only to name a few.

In Person Weeks Banking Supervision

Public Financial

Management

Revenue Administration Statistics Total % of

Total

CountriesAfghanistan 0.0 0.0 1.0 4.0 5.0 2.13%Egypt 21.0 7.0 16.0 6.0 50.0 21.28%Iraq 4.0 8.0 0.0 9.0 21.0 8.94%Jordan 5.0 9.0 17.0 5.0 36.0 15.32%Lebanon 12.0 10.0 10.5 3.0 35.5 15.11%Sudan 12.0 14.0 9.5 7.0 42.5 18.09%West Bank & Gaza 8.0 0.0 9.0 2.0 19.0 8.09%Libya 4.0 0.0 0.0 0.0 4.0 1.70%Regional Activities 4.0 12.0 3.0 3.0 22.0 9.36%Total 70.0 60.0 66.0 39.0 235.0 100.00%Source: IMF - METAC, Credit Libanais Economic Research Unit

Banking Supervision

33.80%

Public Financial Management

28.17%

Revenue Administration

29.58%

Statistics8.45%

Breakdown of IMF's Technical Assistance to Lebanon in FY 2016

Source: IMF-METAC, Credit Libanais Economic Research Unit

0.0 10.0 20.0 30.0 40.0 50.0

Libya

Afghanistan

West Bank & Gaza

Iraq

Regional Activities

Lebanon

Jordan

Sudan

Egypt

4.0

5.0

19.0

21.0

22.0

35.5

36.0

42.5

50.0

METAC Technical Assistance per Recipient in FY 2016 (person weeks)

Source: IMF-METAC, Credit Libanais Economic Research Unit

LEBANON NEWS

Weekly Market Watch

SOURCE: WORLD JUSTICE PROGRAM, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 3

LEBANON RANKS SECOND TO LAST IN MENA REGION IN THE 2016 RULE OF LAW INDEX

The World Justice Program, an independent organization working to advance the rule of law around the world, recently released its Rule of Law Index 2016 report in its sixth annual edition, in which it ranks 113 countries worldwide by measuring a “nation’s adherence to the rule of law from the perspective of how ordinary people experience it”. More particularly, the Rule of Law Index is the average of eight factors highlighted in the following section:

- Constraints on Government Powers: measures the extent to which those who govern are bound by law

- Absence of Corruption: measures the absence of corruption in a number of government agencies

- Open Government: measures the openness of a government and to the extent to which it shares information with the public

- Fundamental Rights: measures the protection of fundamental human rights

- Order and Security: measures how well the society assures the security of persons and property

- Regulatory Enforcement: measures the extent to which regulations are fairly and effectively implemented and enforced

- Civil Justice: measures whether ordinary people can resolve their grievances peacefully and effectively through the civil justice system

- Criminal Justice: evaluates the criminal justice system

Nordic countries dominated the top four positions, with Denmark ranking first in the world in the Rule of Law 2016 with a score of 0.89, while also occupying the first place in the constraints on government powers, absence of corruption, and fundamental rights with respective scores of 0.93, 0.96 and 0.92. Denmark was trailed by Norway which also occupied the first place in the world in the open government factor with a score of 0.87, and Finland which ranked first worldwide in terms of the criminal justice factor with a score of 0.85. Sweden completed the top four list with a score of 0.86. Regionally, the U.A.E. topped the list (global rank 33) with a Rule of Law index score of 0.66, followed by Jordan (score: 0.59; global rank: 42) and Tunisia (score: 0.53; global rank: 58). Egypt, on the other hand, ranked last in the Middle East and North Africa (MENA) region, with a score of 0.37, positioning last on a global basis in the open government factor with a score of 0.23. On the local front, Lebanon ranked 89th in the world in the Rule of Law index with a score of 0.46. Lebanon came in 6th among 7 covered Middle East and North Africa countries and 33rd amongst 37 covered upper middle income countries in the concerned index. In details, Lebanon’s best score (0.64) was in the order & security factor (global rank of 83, upper middle income class rank of 24, MENA rank of 5), followed jointly by the constraints on government power factor with a score of 0.51 (global rank of 73, upper middle income class rank of 21, MENA rank of 5) and the fundamental rights factor also with a score of 0.51 (global rank of 77, upper middle income class rank of 25, MENA rank of 2) . On the other hand, Lebanon fared worst in the criminal justice factor with a score of 0.31 (global rank of 103, upper middle income class rank of 34, and last in the MENA region) and the absence of corruption factor with a score of 0.36 (global rank of 88, upper middle income class rank of 32, and last in the MENA region). This is further highlighted by the following two tables:

Country

Score Global Rank

Rank Among Mena

CountriesDenmark 0.89 1 N.A.Norway 0.88 2 N.A.Finland 0.87 3 N.A.Sweden 0.86 4 N.A.U.A.E. 0.66 33 1Jordan 0.59 42 2Tunisia 0.53 58 3Morocco 0.53 60 4Iran 0.46 86 5Lebanon 0.46 89 6Egypt 0.37 110 7Source: World Justice Project, Credit Libanais Economic Research Unit

Rule of Law Index 2016

Index's ConstituentsScore Global

RankIncome

RankMENA Rank

Constraints on Government Powers 0.51 73 21 5

Absence of Corruption 0.36 88 32 7

Open Government 0.43 93 32 3

Fundamental Rights 0.51 77 25 2

Order & Security 0.64 83 24 5

Regulatory Enforcement 0.41 96 36 6

Civil Justice 0.48 77 29 6

Criminal Justice 0.31 103 34 7

Source: World Jus tice P roject, C redit L ibanais Economic Research Unit

Breakdown of Lebanon's Performance

LEBANON NEWS

Weekly Market Watch

SOURCE: AL BAYAN ECONOMIC MAGAZINE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 4

LEBANON HOSTS HIGHEST NUMBER OF INSURANCE COMPANIES IN THE MENA REGION IN 2015

“Al Bayan Economic”, the specialized banking, insurance, and shipping pan-Arab monthly magazine, published its annual “MENA Insurers, Reinsurers and Reinsurance Brokers 2015 Ranking” special issue in which it ranks some 372 insurance companies in the Middle East and North Africa (MENA) region according to their written premiums for the year 2015. The issue also features the top 150 MENA insurance companies in terms of balance sheet size, shareholders’ equity, profits, and paid up capital, in addition to a ranking of MENA reinsurance companies according to their respective written premiums, equity, and net profits. The Saudi Tawuniya topped the list of MENA insurance companies in terms of written premiums in 2015 ($2,012.10 million), followed by the Saudi Bupa Arabia ($1,954.13 million), Qatar Insurance ($1,506 million), the Bahraini Medgulf Group ($1,300 million), and the Emirati Daman National Health ($1,200 million). In parallel, Qatar Insurance came in first in the region in terms of total assets ($6,935 million) and paid up capital ($662 million), while the Moroccan MAMDA/MCMA topped the list in terms of size of shareholders’ equity ($2,500 million) and Qatar General outperformed its peers in terms of profits ($250.30 million). From a concentration standpoint, Lebanon houses the largest number of insurance companies (50) in the MENA region, followed by the KSA (34) and the UAE (32), only to name a few. The major Lebanese insurance companies that surfaced on the list include: Allianz SNA (MENA rank: 56), Metlife Alico (MENA rank: 63), Bancassurance (MENA rank: 64), Bankers (MENA rank: 68), and Arope Lebanon (MENA rank: 69). The aggregate written premiums of all Lebanese insurance companies stood at $1,592 million in 2015, representing 5.05% of total MENA region written premiums, compared to a higher stake of 5.25% in 2014. As far as profitability is concerned, the combined profits of all Lebanese insurance companies reached $171.81 million in 2015, constituting 7.95% of MENA region combined profits, up from 7.72% in 2014.

Country Number of Companies

Lebanon 50KSA 34UAE 32Egypt 32Iraq 28Jordan 25Algeria 22Tunisia 21Kuwait 20Morocco 17Other Countries 92

MENA Insurance Companies by Country in 2015

Source: Al Bayan Economic, Credit Libanais Economic Research Unit

Company Name Rank 2015 Written Premiums (in USD Million)

Allianz SNA 56 122.94Metlife Alico 63 113.91Bancassurance 64 112.51

Bankers 68 108.91Arope/Lebanon 69 108.85LIA 78 97.28Libano Suisse 80 96.40AXA ME/Lebanon 82 95.23Fidelity 100 71.75ADIR/Lebanon 109 61.80Union Nationale 123 51.93Continental Trust 124 51.70Mashrek/Lebanon 142 40.93

Lebanese Insurance Companies Appearing on the Top 150 MENA Insurance Companies List

Source: Al Bayan Economic, Credit Libanais Economic Research Unit

LEBANON NEWS

Weekly Market Watch

SOURCE: UNDP, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 5

LEBANON RECEIVES $878.59 THOUSAND UNDER THE UNDP’S THEMATIC TRUST FUNDS IN 2015

The United Nations Development Program (UNDP) released its “UNDP Thematic Trust Funds - 2015 Annual Report” in which it sheds light on the key developments surrounding three of its thematic trust funds, namely the Crisis Prevention and Recovery, Democratic Governance, and Environment trust funds, in the year 2015. According to the report, the Crisis Prevention and Recovery thematic trust fund collected some $44.30 million in donations in 2015, with major donors including the Netherlands ($13.26 million), the United Kingdom ($5.93 million), the United States ($5.41 million), and Switzerland ($5.16 million), out of a wide range of contributing countries and international institutions. On the other hand, the fund’s disbursements aggregated to $79.08 million and were mainly allocated to Africa (36%) and Arab States (31%), followed, and at quite a distance, by Asia & the Pacific (14%), Europe & the Commonwealth of Independent States (CIS) (13%), and Latin America & the Caribbean (6%). It is worth noting that the goals of the Crisis Prevention and Recovery trust fund mainly revolve around supporting inclusive governance to create more peaceful societies, reinforcing institutions to improve access to basic services, reducing and managing the risk of disaster and violent conflicts, and nurturing recovery to regain sustainable development. Gender equality is also sought by the fund. From another standpoint, the report unveiled that around $8.89 million were raised under the Democratic Governance thematic trust fund in the year 2015 emanating from only five sources, namely Norway ($3.80 million), Australia ($2.90 million), Germany ($1.10 million), Luxembourg ($1.06 million), and Estonia ($26.46 thousand). The fund’s allocations, however, neared the $11.95 million mark and were spread between Europe & CIS (29%), Asia & the Pacific (26%), Latin America & the Caribbean (20%), Africa (15%), and Arab States (10%). The Democratic Governance trust fund aims primarily at enhancing accountability, participation, and representation in each country, combatting corruption, reinforcing institutions to improve access to basic services, and prioritizing the issues of poverty, inequality (including gender inequality), and exclusion in national debates and action plans. As for the Environment thematic trust fund, the latter received $11.40 million in the year 2015 from Germany ($10.44 million), Luxembourg ($588.24 thousand), and the Netherlands ($375 thousand). Conversely, the fund spent some $12.16 million during that same year, half of which (52%) was geared to Latin America & the Caribbean, and the remaining half was allocated between Asia & the Pacific (33%) and Africa (15%). Locally, Lebanon was granted about $867.38 thousand by the Crisis Prevention and Recovery thematic trust fund and some $11.22 thousand by the Environment thematic trust fund. In a related note, the UNDP indicated that “the city government” has formed a special unit in charge of planning and managing disaster risk reduction strategies in the southern city of Saida which faces several risks such as earthquakes, tsunamis, and ill managed garbage dumps. A disaster committee was also established for coordination purposes and a disaster and solidarity fund was created to initiate instant response and recovery operations.

The Crisis Prevention and Recovery

Thematic Trust Fund

The Democratic Governance Thematic

Trust Fund

The Environment Thematic Trust Fund

Africa 36% 15% 15%Arab States 31% 10% -Asia & the Pacific 14% 26% 33%Europe & CIS 13% 29% -Latin America & the Caribbean 6% 20% 52%Source: UNDP, Credit Libanais Economic Research Unit

Regional Breakdown of the UNDP's Thematic Trust Funds' Expenditures in 2015

LEBANON NEWS

Weekly Market Watch

SOURCE: ERNST & YOUNG, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 6

OCCUPANCY RATE IN LEBANON’S HOSPITALITY SECTOR AT 70% IN SEPTEMBER 2016

Ernst & Young (EY) published its “Middle East Hotel Benchmark Survey” on the performance of 4 & 5 star hotels in the Middle East region, conveying a 15 percentage-point annual hike in the average occupancy rate in Beirut’s hospitality sector to 70.0% during the month of September 2016. On the other hand, the average room rate fell by 11.7% y-o-y to $145, while the average room yield rose by 11.3% annually to $102. The following chart captures the monthly evolution in the occupancy rate in Beirut’s 4 & 5 star hotels over the September 2015 - September 2016 period: On a regional basis, Beirut recorded the 5th lowest (58%) occupancy rate among covered Middle Eastern (MEA) capitals during the first three quarters of 2016. Abu Dhabi-UAE outperformed the region, recording an average occupancy rate of 76% by end of Q3-2016, followed by Cairo (63%), Muscat (62%), and Doha (61%), only to name a few. In a related note, Kuwait charged the highest average room rate of $266 in the region’s 4 & 5 star hotels, right ahead of Doha-Qatar ($214), Manama-Bahrain ($202), Riyadh-Saudi Arabia ($194), Muscat-Oman ($186), Amman-Jordan ($159), Beirut-Lebanon ($138), Cairo-Egypt ($129), and Abu Dhabi-UAE ($121).

Sep-2015 Sep-2016 ChangeHotel Occupancy Rate (%) 55.0 70.0 15 pctg pointsAverage Room Rate (USD) 164 145 -11.7%Rooms Yield (USD) 92 102 11.3%

Performance of Beirut's Hospitality Sector During the Month of

Source: Ernst & Young, Credit Libanais Economic Research Unit

53%

54%56% 56%

53%57%

51%

55%

66%

44%

63%

63%

70%

30%

40%

50%

60%

70%

80%

Monthly Evolution of Hotel Occupancy in Beirut


Country - Capital Sep-2015 Sep-2016 Change in % Pts Sep-2015 Sep-2016 % Change Sep-2015 Sep-2016 %

Change

Bahrain - Manama 48.0 49.0 1.0 216 202 -6.8% 105 100 -4.8%Egypt - Cairo City 47.0 63.0 16.0 112 129 14.7% 54 82 51.8%Jordan - Amman 56.0 49.0 -7.0 156 159 1.9% 88 79 -10.7%Kuwait-Kuwait 47.0 37.0 -10.0 255 266 4.4% 121 100 -17.6%Lebanon - Beirut 58.0 58.0 0.0 166 138 -16.7% 97 81 -16.6%Oman-Muscat 62.0 62.0 0.0 213 186 -12.5% 132 117 -11.4%Qatar - Doha 64.0 61.0 -3.0 251 214 -14.7% 162 132 -18.4%Saudi Arabia - Riyadh 63.0 56.0 -7.0 212 194 -8.4% 134 109 -18.3%United Arab Emirates - Abu Dhabi 77.0 76.0 -1.0 142 121 -15.3% 110 92 -16.0%

Middle East Hotel Benchmark Survey For the Period Ended

Hotel Occupancy Rates (%) Average Room Rates (USD) Room Yields (USD)

Source: Ernst & Young - Middle East Hotel Benchmark Survey, Credit Libanais Economic Research Unit

0.0% 20.0% 40.0% 60.0% 80.0% 100.0%

Abu Dhabi

Cairo

Muscat

Doha

Beirut

Riyadh

Manama

Amman

Kuwait

76.0%

63.0%

62.0%

61.0%

58.0%

56.0%

49.0%

49.0%

37.0%

Hotel Occupancy Rate in the Middle East Region up to September 2016

Source: Ernst & Young, Credit Libanais Economic Research Unit0 50 100 150 200 250 300

Kuwait

Doha

Manama

Riyadh

Muscat

Amman

Beirut

Cairo

Abu Dhabi

266

214

202

194

186

159

138

129

121

Average Room Rate in the Middle East Region up to September 2016 (USD)


LEBANON NEWS

Weekly Market Watch

SOURCE: ORDER OF ENGINEERS, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 7

CONSTRUCTION PERMITS AT AN EIGHT-YEAR LOW AS OF SEPTEMBER 2016

Lebanon’s construction permits, which reflect the level of future supply in the real estate sector, improved to 799,271 sqm during the month of September 2016, compared to 793,580 sqm in August. On a cumulative basis, however, construction permits dropped by 3.99% y-o-y to an eight-year low of 7,483,155 sqm by the end of the first nine months of 2016, compared to 7,794,425 sqm during that same period last year.

As far as the geographical distribution of construction permits is concerned, the Mount Lebanon region continued to control the lion’s share of total issued permits (3,888,213 sqm <51.96%>), followed by the South (1,314,687 sqm <17.57%>), Bekaa (927,255 sqm <12.39%>), and Nabatieh (922,869 sqm <12.33%>) regions. It is worth noting that figures for the North governorate are underestimated since they exclude permits issued by the North Order of Engineers.

The Mount Lebanon region enjoyed as well the highest exploitation coefficient, which stood at 839 sqm per construction permit YTD September 2016, followed by the Bekaa (793 sqm/transaction), Beirut (716 sqm/transaction), and South (538 sqm/transaction) governorates, only to name a few.

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

Sep-2010 Sep-2011 Sep-2012 Sep-2013 Sep-2014 Sep-2015 Sep-2016

11,305,02010,527,030

9,045,1027,804,456

8,760,4007,794,425 7,483,155

Evolution of Cumulative Construction Permits (Sqm)

Sqm No. of Transactions

Average Sqm/Trans.

Beirut 369,487 516 716

Mount Lebanon 3,888,213 4,633 839

North* 60,644 111 546

Bekaa 927,255 1,170 793

South 1,314,687 2,445 538

Nabatieh 922,869 1,810 510

Total 7,483,155 10,685 700

* Figures for the North Governorate are underestimated since they exclude

permits issued by the North Order of Engineers

Source: Order of Engineers, Credit Libanais Economic Research Unit

Geographical Breakdown of Construction Permitsup to September 2016

Beirut4.94%

Mount Lebanon51.96%

North*0.81%

Bekaa12.39%

South17.57%

Nabatieh12.33%

Geographical Breakdown of Construction Permits up to September 2016


0 200 400 600 800 1,000

North*

Mount Lebanon

Beirut

Bekaa

South

Nabatieh

546

839

716

793

538

510

Average Sqm/Construction Permit Per Region up to September 2016


Sep-2010 11,305,020Sep-2011 10,527,030Sep-2012 9,045,102

Sep-2013 7,804,456

Sep-2014 8,760,400

Sep-2015 7,794,425

Sep-2016 7,483,155Source: Order o f Engineers, Credit Libanais Economic Research Unit

Evolution of Construction Permits (Sqm) During the Nine-Month Period Ending

LEBANON NEWS

Weekly Market Watch

SOURCE: ABL, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 8

COMMERCIAL BANKS’ ASSETS UP AT $195.77 BILLION BY AUGUST 2016

The consolidated balance sheet of commercial banks operating in Lebanon rose by 5.26% (LBP 14,750 billion) during the first eight months of 2016 to LBP 295,129 billion ($195.77 billion), up from LBP 280,379 billion ($185.99 billion) at end of year 2015. On an annual basis, the consolidated assets of the banking sector came in 7.79% higher than the LBP 273,788 billion ($181.62 billion) reading reported at end of August 2015. The sector remains highly liquid, enjoying a primary liquidity ratio of 80.07% up from 77.92% a year before. On the funding side of the balance sheet, customer deposits (private and public sector) added LBP 8,239 billion ($5.46 billion) during the first eight months of 2016 reaching LBP 241,828 billion ($160.42 billion) at end of August, up from LBP 233,589 billion ($154.95 billion) at year-end 2015. Said rise comes as a result of the 3.72% (LBP 6,709 billion) expansion in deposits from the resident private sector to LBP 187,198 billion ($124.18 billion), accompanied by a 3.32% (LBP 1,593 billion) increase in deposits from the non-resident private sector to LBP 49,619 billion ($32.91 billion). From a currency denomination standpoint, deposits in Lebanese Pounds rose by 3.67% (LBP 3,138 billion) since end of 2015 to LBP 88,477 billion ($58.69 billion), with foreign currency deposits increasing by 3.44% (LBP 5,102 billion) to LBP 153,352 billion ($101.73 billion). In this context, the deposit dollarization rate extended its downturn to 64.76% in August, from 64.88% at end of year 2015 and 64.96% in August 2015. On an annual basis, customer deposits rose by 4.99% from LBP 230,342 billion ($152.80 billion) at end of August 2015, justifying the increase in total assets.

On the lending front, loans to the private sector increased by 4.10% (LBP 3,352 billion) YTD August to LBP 85,095 billion ($56.45 billion), up from LBP 81,743 billion ($54.22 billion) in December 2015. The loans portfolio increased by 7.71% annually, lifting the ratio of net loans to customer deposits to 35.19%, up from 34.99% in December and 34.30% in August of last year. More specifically, the ratio of LBP-denominated private sector loans to LBP deposits inched higher to 25.10%, from 24.11% at year-end 2015 and 23.90% at end of August 2015. On the other hand, the ratio of foreign currency-denominated private sector loans to foreign currency deposits inched lower to 41.01% in August, down from 41.26% in December yet remained higher than the 40.19% level registered in August 2015. It is worth noting that the sizeable monthly increase (9.46%) in deposits of commercial banks at BDL and 4.95% drop in claims on the public sector can mainly be attributed to the latest series of swap transactions between the BDL and commercial banks under the umbrella of which banks invested in CDs issued by BDL while concurrently liquidating treasury bill positions before maturity.

The consolidated capital accounts of commercial banks operating in Lebanon reached LBP 26,272 billion ($17.43 billion) in August, compared to LBP 25,131 billion ($16.67 billion) at end of year 2015 and LBP 24,731 billion ($16.41 billion) in August of last year. This can be explained by banks’ continuous reinforcement of their capital bases to meet BDL solvency requirements.

0.0020.0040.0060.0080.00

100.00120.00140.00160.00180.00200.00

2011 2012 2013 2014 2015 Aug-2016

140.58151.88

164.82175.70

185.99 195.77USD Billion

Evolution of Commercial Banks' Consolidated Assets

Source: ABL, Credit Libanais Economic Research Unit

USD Billion 2011 2012 2013 2014 Aug-2015 2015 Aug-2016

Total Assets 140.58 151.88 164.82 175.70 181.62 185.99 195.77

Loans to the Private Sector 39.38 43.45 47.38 50.90 52.41 54.22 56.45

Customer Deposits, o/w: 117.70 127.66 139.17 147.64 152.80 154.95 160.42

- Resident Private Sector Deposits 94.45 100.91 107.73 114.12 117.93 119.73 124.18

- Non-Resident Private Sector Deposits 21.26 24.09 28.48 30.30 31.70 31.86 32.91

- Public Sector Deposits 1.99 2.66 2.96 3.21 3.17 3.37 3.32

Capital Accounts 10.72 12.64 14.20 15.73 16.41 16.67 17.43

Dollarization Rate 65.92% 64.82% 66.14% 65.71% 64.96% 64.88% 64.76%

Private Sector Loans/Deposits Ratio 33.45% 34.04% 34.05% 34.48% 34.30% 34.99% 35.19%

- LBP Private Sector Loans/LBP Deposits 20.53% 20.84% 22.65% 23.58% 23.90% 24.11% 25.10%

- FC Private Sector Loans/FC Deposits 40.47% 41.63% 40.26% 40.53% 40.19% 41.26% 41.01%Source: The Association of Banks in Lebanon, Credit Libanais Economic Research Unit

LEBANON NEWS

Weekly Market Watch

SOURCE: ABL, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 9

GROSS PUBLIC DEBT AT $74.04 BILLION AT END OF AUGUST 2016

On the public finance front, Lebanon’s gross public debt widened by around $658.71 million during the month of August 2016 to $74.04 billion, up from $73.38 billion in July. On an annual basis, gross public debt grew by $5.15 billion from $68.89 billion in August 2015. The Lebanese banking sector remains a major financing source for the Lebanese government, notwithstanding the drop in its share of gross public debt to 46.89% in August, from 49.78% in July, pursuant to the many rounds of swap mechanism instigated by the BDL in mid-year 2016. As far as debt in local currency is concerned, the latter rose by 1.31% month-on-month and by 5.21% year-on-year to $44.96 billion. Concurrently, debt in foreign currencies increased by 0.27% on a monthly basis and by 11.17% on a yearly basis to $29.09 billion. The share of debt in local currency increased to 60.72% of gross public debt by August, from 60.47% one month earlier, while that in foreign currencies narrowed to 39.28%. Net public debt, which factors out public sector deposits, came in 7.48% higher y-o-y at $64.09 billion, up from $59.63 billion in August 2015. The chart below sketches the annual evolution of Lebanon’s public debt since August 2009, resulting in a 5.76% compounded annual growth in net debt over the concerned period.

Aug-2015 Aug-2016 Y-O-Y % Change

Gross Public Debt 68.89 74.04 7.47% Debt in LBP 42.73 44.96 5.21% Debt in Foreign Currencies 26.17 29.09 11.17%Public Sector Deposits 9.26 9.95 7.43%

Net Public Debt 59.63 64.09 7.48%

Public Debt (USD Billion)

Source: The Association of Banks in Lebanon, Credit Libanais Economic Research Unit

Debt in LBP

60.72%

Debt in Foreign

Currencies39.28%

Composition of Gross Public Debt in August 2016


0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

Aug-2009 Aug-2010 Aug-2011 Aug-2012 Aug-2013 Aug-2014 Aug-2015 Aug-2016

43.32 44.45 45.69 47.8451.73

55.5959.63

64.09Billions of USD

Evolution of Net Public Debt


LEBANON NEWS

Weekly Market Watch

SOURCE: BDL, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 10

OPENED LETTERS OF CREDITS DROP BY 19.03% Y-O-Y BY AUGUST 2016

According to Banque Du Liban statistics, opened letters of credit (L/Cs), a measurement tool for trade activity, fell by 11.19% during the month of August 2016 to $520.46 million, down from $586.07 million in July. On a cumulative basis, the face value of opened L/Cs came in 19.03% lower y-o-y at $4,213.40 million by August 2016, down from $5,203.71 million a year earlier. Documentary L/Cs opened to finance imports activities shed 8.44% y-o-y to $3,156.02 million by August 2016, from $3,447.03 million in the same period last year. Concurrently, utilized credits for imports slipped to $3,156.82 million, from $3,450.48 million by August 2015. In parallel, inward bills for collection, another documentary credit form of financing (backed by invoices), plunged by 15.83% on a yearly basis to $799.14 million, down from $949.45 million in the equivalent period in 2015.

In a related note, documentary L/Cs opened to finance exports activities notched 39.81% lower y-o-y to $1,057.38 million by the month of August 2016 compared to $1,756.68 million a year earlier. Utilized credits to finance exports also dropped by 31.91% to $1,176.65 million (111.28% of opened L/Cs for exports), from $1,727.96 million in the corresponding period in 2015. Concurrently, outward bills for collection fell by 21.54% annually to $938.84 million, while the value of outstanding outward bills rose by 49.48% to $860.90 million.

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Up to Aug-2009

Up to Aug-2010

Up to Aug-2011

Up to Aug-2012

Up to Aug-2013

Up to Aug-2014

Up to Aug-2015

Up to Aug-2016

5,047.84

6,195.87 6,328.99 6,963.86 7,110.04

6,508.69

5,203.71

4,213.40

$ Million

Evolution of Total Opened L/Cs

Source: BDL, Credit Libanais Economic Research Unit

$ Million August 2015 August 2016 Y-O-Y % Change

Documentary L/Cs

– Opened Credits 1,756.68 1,057.38 -39.81%

– Utilized Credits 1,727.96 1,176.65 -31.91%

– Outstanding Credits 1,035.49 646.30 -37.58%

Bills For Collection

– Outward Bills 1,196.55 938.84 -21.54%

– Outstanding Bills 575.92 860.90 49.48%Source: BDL, Credit Libanais Economic Research Unit

Documentary Credits for Exports' Financing for the Period Ended

0

500

1,000

1,500

2,000

August 2015 August 2016

1,756.68

1,057.381,196.55

938.84

$ Million

Opened Letters of Credits & Outward Bills for Exports' Financing during the Period Ended

– Opened Credits – Outward Bills

$ Million August 2015 August 2016 Y-O-Y % Change

Documentary L/Cs

– Opened Credits 3,447.03 3,156.02 -8.44%

– Utilized Credits 3,450.48 3,156.82 -8.51%

– Outstanding Credits 870.65 874.36 0.43%

Bills For Collection

– Inward Bills 949.45 799.14 -15.83%

– Outstanding Bills 132.14 145.14 9.84%Source: BDL, Credit Libanais Economic Research Unit

Documentary Credits for Imports' Financing for the Period Ended

0

500

1,000

1,500

2,000

2,500

3,000

3,500

August 2015 August 2016

3,447.033,156.02

949.45799.14

$ Million

Opened Letters of Credits & Inward Bills for Imports' Financing during the Period Ended

– Opened Credits – Inward Bills

NET FOREIGN ASSETS OF THE LEBANESE FINANCIAL SECTOR REGISTER FIRST CUMULATIVE SURPLUS SINCE 25 MONTHS

The net foreign assets of Lebanon’s financial sector recorded a historic monthly surplus (the highest amongst publicly available data dating back to January 1993) of $1,787.8 million in August 2016 compared to a surplus of $352.1 million in July and a deficit of $13 million in June. This sizeable surplus is attributed to the swap transactions launched in the second half of 2016 between the Central Bank and commercial banks in the aim of boosting the foreign currency reserves at BDL on the one hand and tackling the mounting deficit in the balance of payments on the other. Under the provisions of the swap arrangement, Lebanese banks were incentivized to repatriate part of their placements with correspondent banks and channel them towards USD-denominated Certificates of Deposit issued by the Central Bank. Consequently, the net foreign assets of the Lebanese Central Bank registered a $3.96 billion surplus in August at the expense of some $2.17 billion deficit in the net foreign assets of banks & financial institutions. On a cumulative basis, the net foreign assets of Lebanon’s financial sector registered a surplus of $366.2 million (the first cumulative surplus since 25 months) by August compared to a deficit of around $1,649 million in that same period last year. This comes as a result of the accumulation of the $4,088.4 million surplus in the net foreign assets of the Central Bank which outweighed the deficit of $3,722.0 million in the net foreign assets at the level of banks and financial institutions. WEIGHTED AVERAGE INTEREST RATE ON LBP DEPOSITS AT 5.56% IN AUGUST 2016

According to BDL statistics, the weighted average interest rate on Lebanese Pound denominated deposits dropped to 5.56% during the month of August 2016 from 5.57% in July and 5.61% in August 2015. On the other hand, the weighted average interest rate on U.S. Dollar denominated deposits increased to 3.39% in the eighth month of this year from 3.30% in July and 3.19% a year earlier. On the other hand, commercial banks’ discount and lending rate on LBP denominated loans fell to 8.29% in August down from 8.32% a month earlier while on the other hand widening to 7.28% on USD denominated loans as elaborated hereunder:

LEBANON NEWS

Weekly Market Watch


Net Foreign Assets

In Millions of USD August 2015 August 2016 % Change

Central Bank 1,459.5 4,088.4 180.12%

Banks & Financial Institutions (3,108.0) (3,722.0) 19.76%

Total (1,648.9) 366.2 -122.21%

For the Eight-Month Period Ending

Source: Banque Du Liban, Credit Libanais Economic Research Unit

-2000

-1500

-1000

-500

0

500

1000

1500

2000

2500

3000

Aug-2010 Aug-2011 Aug-2012 Aug-2013 Aug-2014 Aug-2015 Aug-2016

2,753.9

(1,237.3)

(1,839.5)

(1,180.2)

(432.9)

(1,648.9)

366.2

USD Million

Cumulative Net Foreign Assets of the Financial Sector


-1000

-500

0

500

1000

1500

2000

January February March April May June July August

(280.2)(152.6)

(417.4)

136.0 189.2

(794.3)

2.4

(332.0)

(718.9)

362.6

(287.9) (254.9)

(861.6)

(13.0)

352.1

1,787.8

Monthly Evolution of the Financial Sector's Net Foreign Assets

2015 2016

USD Million


LBP USD LBP USD LBP USD

5.61% 3.19% 5.57% 3.30% 5.56% 3.39%

6.00% 3.65% 5.94% 3.75% 5.94% 3.83%

6.89% 7.12% 8.32% 7.25% 8.29% 7.28%


July 2 0 16Inte re st Ra te Le ve ls

August 2 0 16

Discount & Loans Rate

Average Rate on Deposits

Term Savings & Deposits Rate

August 2 0 15

0.0

5.0

10.0

Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16

%

Evolution of LBP Lending & Deposits Rates

Spread LBP Average Rate on Deposits LBP Discount and Loans Rate


1.0

6.0


%

Evolution of USD Lending & Deposits Rates

Spread USD Average Rate on Deposits USD Discount and Loans Rate


LEBANON NEWS

Weekly Market Watch


CONSOLIDATED ASSETS OF FINANCIAL INSTITUTIONS AT $1.59 BILLION BY END OF AUGUST 2016

The consolidated balance sheet of financial institutions operating in Lebanon widened by LBP 75,290 million ($49.94 million) during the month of August 2016 to LBP 2,393.22 billion ($1,587.54 million), up from LBP 2,317.93 billion ($1,537.60 million) in July. This comes as a result of the 6.01% ($47.61 million) monthly hike in claims on the private sector to LBP 1,265.55 billion ($839.50 million), coupled with some 2.75% ($3.66 million) increase in claims on the public sector to LBP 206.22 billion ($136.79 million). On an annual basis, the balance sheet of Lebanese financial institutions rose by 7.62% in August 2016, compared to a 15.98% yearly contraction in August 2015 and a 17.36% y-o-y expansion in the same period in 2014. On the lending front, claims on the private sector, which constitute 52.88% of the total assets of financial institutions, came in 10.12% higher y-o-y at LBP 1,265.55 billion ($839.50 million). On the other hand, claims on the public sector shed 4.14% annually to LBP 206.22 billion ($136.79 million), representing a stake of 8.62% of the total balance sheet of Lebanese financial institutions. In a related note, the compounded annual growth rate (CAGR) in the balance sheet of Lebanese financial institutions hit the 9.68% mark over the August 2010 – August 2016 period, as sketched in the chart hereunder:

USD Million Aug-2010 Aug-2011 Aug-2012 Aug-2013 Aug-2014 Aug-2015 Aug-2016Y-O-Y % Change

AssetsCash & Banks 271.70 415.35 421.49 591.33 618.83 591.15 617.86 4.52%Claims on the Private Sector 514.16 568.96 586.27 786.79 791.79 762.39 839.50 10.12%Claims on the Public Sector 105.18 103.33 109.74 117.65 355.13 142.70 136.79 -4.14%Other Assets 21.08 24.45 18.73 0.18 -10.10 -21.07 -6.62 -68.59%Total Assets 912.12 1,112.09 1,136.23 1,495.95 1,755.65 1,475.17 1,587.54 7.62%LiabilitiesLiabilities to the Private Sector 197.31 254.58 274.97 320.28 311.95 252.64 314.73 24.58%Liabilities to the Financial Sector 347.31 473.55 462.51 707.25 919.70 661.68 661.87 0.03%Other Financial Liabilities 12.56 13.88 17.72 19.42 20.96 20.94 30.33 44.85%Capital Accounts 259.13 279.47 327.44 386.49 422.61 457.04 471.86 3.24%Other Liabilities 95.80 90.61 53.59 62.51 80.42 82.88 108.74 31.20%Total Liabilities 912.12 1,112.09 1,136.23 1,495.95 1,755.65 1,475.17 1,587.54 7.62%

Financial Institutions Consolidated Balance Sheet


Cash & Banks & Other Assets

38.50%

Claims on the Private Sector

52.88%

Claims on the Public Sector

8.62%

Breakdown of Financial Institutions Balance Sheet as at End of August 2016


0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Aug-2010 Aug-2011 Aug-2012 Aug-2013 Aug-2014 Aug-2015 Aug-2016

912.12

1,112.09 1,136.23

1,495.95

1,755.65

1,475.171,587.54

$ Million

Evolution of Financial Institutions' Assets


LEBANON NEWS

Weekly Market Watch


CEMENT DELIVERIES UP BY 8.18% Y-O-Y BY AUGUST 2016

Cement deliveries, the coincident indicator of construction activity, widened by 30.01% during the month of August 2016 to 517,135 tons, up from 397,767 tons in July. On a cumulative basis, cement deliveries also rose by 8.18% y-o-y to 3,413,811 tons by August 2016, from 3,155,646 tons during that same period a year earlier. Cement deliveries registered a very shy compounded annual growth rate (CAGR) of 0.30% over the August 2009 – August 2016 period, mirroring the lackluster activity of Lebanon’s construction sector. THE COINCIDENT INDICATOR INCREASES BY 6.75% Y-O-Y IN AUGUST 2016

Banque Du Liban’s coincident indicator, which is an indicative measure of the country’s overall economic activity, and which comprises import of petroleum derivatives, electricity production, check clearing activity, cement deliveries, foreign passengers, foreign trade, and the M3 monetary aggregate, rose by 4.56% during the month of August 2016 to 284.6, up from 272.2 in July. On an annual basis, the coincident indicator came in 6.75% higher than last year’s reading of 266.6, portraying as such a moderate improvement in the overall economic activity.

August-2009 3,343,722

August-2010 3,528,559

August-2011 3,699,410

August-2012 3,406,496

August-2013 3,650,328

August-2014 3,693,154

August-2015 3,155,646

August-2016 3,413,811

Evolution of Cumulative Cement Deliveries (Tons)


2,000,000

2,500,000

3,000,000

3,500,000

4,000,0003,343,722

3,528,559 3,699,4103,406,496

3,650,3283,693,154

3,155,646 3,413,811

Yearly Evolution of Cement Deliveries


Tons

240

250

260

270

280

290

300

310


266.6

271.5

281.4

293.1

302.3

279.4

294.6296.1

297.6 297.9

273.5 272.2

284.6

Evolution of Lebanon's Coincident Indicator


LEBANON NEWS

Weekly Market Watch

SOURCE: CAS, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 14

LEBANON CPI CONVEYS AN ANNUAL INFLATION OF 1.03% IN SEPTEMBER 2016

According to the Central Administration of Statistics (CAS), Lebanon’s monthly inflation, as captured by the change in the consumer price index (CPI), stood at 1.52% during the month of September 2016, compared to -0.84% in August. On an annual basis, Lebanon’s CPI inched higher by 1.03% to 97.06 in the ninth month of the current year, up from 96.07 in September 2015. Said annual increase in prices is mainly attributed to the 3.50% increase in the prices of housing (owner occupied) (13.20% weight in the index) coupled with the 12.06% hike in the prices of clothing & footwear (5.40% weight) and the 7.46% appreciation in the prices of housing (actual rent) (3.40% weight in the index), among others, which altogether outweighed the 2.53% drop in the prices of water, electricity, gas and other fuels (11.90% weight) along with the 1.21% contraction in transportation costs (13.10% weight in the index) and the 1.08% decline in food and non-alcoholic beverages prices (20.60% weight), only to name a few. The following section captures the fluctuation in Lebanon’s consumer basket’s key constituents: On a geographical basis, all regions across Lebanon reported a monthly increase in CPI values in September. The Beirut region depicts the sharpest monthly rise (2.16%) in its CPI reading, followed by the Bekaa (1.75%), the South (1.52%), and Mount Lebanon (1.37%) regions. The following chart captures the evolution of the yearly change in CPI since September 2009:

Monthly (August 2016-

September 2016) % change

Annual(September

2015-September 2016) % change

Weight

Food & Non-Alcoholic Beverages 0.90% -1.08% 20.60%

Alcoholic Beverages & Tobacco 0.32% 0.79% 1.60%

Clothing & Footwear 9.52% 12.06% 5.40%

Housing - Actual Rent 3.35% 7.46% 3.40%

Housing - Owner Occupied 0.40% 3.50% 13.20%Housing - Water, Electricity, Gas and Other Fuels 1.93% -2.53% 11.90%

Furnishings, Household Equipment & Routine Household Maintenance 1.31% 0.86% 3.70%

Health -0.18% -1.03% 7.80%

Transportation 2.17% -1.21% 13.10%

Communication -0.03% -0.06% 4.60%

Recreation, Amusement, and Culture 0.24% 2.29% 2.30%

Education 0.00% 1.48% 5.90%

Restaurant & Hotels -0.20% 2.38% 2.60%

Miscellaneous Goods & Services 0.01% 1.48% 4.00%

Consumer Price Index 1.52% 1.03% 100.00%

Price Volatility

Source: Central Administration o f Statistics, Credit Libanais Economic Research Unit

-1.40%

4.00%4.80%

10.30%

0.60%

2.30%

-4.67%

1.52%

-5%

-2%

1%

4%

7%

10%

Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16

Evolution of Yearly Change in CPI

Region Monthly Inflation WeightBeirut 2.16% 17.30%Mount Lebanon 1.37% 44.60%North 1.17% 13.80%Bekaa 1.75% 10.50%South 1.52% 7.80%Nabatieh 1.17% 5.80%Lebanon 1.52% 100.00%

September 2016 Inflation Across Regions

Source: Central Administration o f Statistics, Credit Libanais Economic Research Unit

LEBANON NEWS

Weekly Market Watch


RESERVES AT BDL REACH $52.36 BILLION AS AT MID-OCTOBER 2016

The Lebanese Central Bank’s balance sheet conveys some $169.07 million expansion in its foreign assets (foreign currency reserves) portfolio during the first half of October 2016 to $40.77 billion, from $40.60 billion as at end of September. On the other hand, the value of gold reserves at BDL dropped by $640.49 million to reach $11.59 billion amid a bearish outlook on the yellow metal and concerns about the possibility of the U.S. Federal Reserve increasing interest rates. On an annual basis, foreign assets at BDL came in 7.28% higher than the $38 billion reading reported at mid-October 2015. Similarly, the value of gold reserves appreciated by around $0.65 billion (5.98%) year-on-year when compared to the $10.94 billion figure booked at mid-October of last year. Overall, total reserves (foreign currency and gold) at BDL increased by $3.42 billion annually to $52.36 billion, up from $48.94 billion a year before. These reserves cover around 129.18 months of debt service and constitute more than 4.70 folds the principal value of foreign and local currency debt that matures in 2016, and 70.72% & 81.70% of Lebanon’s gross and net public debt on a respective basis:

BDL’s balance sheet fell by $0.45 billion during the first half of October to $103.64 billion as a result of the 0.10% drop in BDL’s securities portfolio to $25.66 billion coupled with some 0.89% slump in the value of total reserves to $52.36 billion along with a 0.26% decline in the value of other assets to $19.37 billion together with a 0.17% fall in fixed assets to $0.22 billion which altogether outweighed the 1.58% increase in the value of loans to local financial sector from $5.93 billion to $6.03 billion. In a related note, the share of gold and foreign currency reserves at BDL decreased to 50.52% of the Central Bank’s total assets by mid-October 2016, down from 50.75% as at end of September of the same year, and continue to trail behind the 52.93% level reported in the same period in 2015.

$ Billion Mid October 2010

Mid October 2011

Mid October 2012

Mid October 2013

Mid October 2014

Mid October 2015

Mid October 2016

Gold 12.71 15.47 16.11 11.84 11.29 10.94 11.59Foreign Assets 31.41 32.02 35.14 35.61 38.47 38.00 40.77Total Reserves 44.12 47.49 51.25 47.44 49.75 48.94 52.36Source: Banque Du Liban, Credit Libanais Economic Research Unit

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

45.00

MidOctober

2010

MidOctober2011

MidOctober2012

MidOctober

2013

MidOctober2014

MidOctober

2015

MidOctober2016

12.71 15.47 16.1111.84 11.29 10.94

11.59

31.41 32.0235.14 35.61

38.47 38.0040.77

Evolution of Total Reserves at Banque Du Liban

Gold Foreign Assets


USD Billion

Total Reserves50.52%

Securities Portfolio24.76%

Loans to Public Sector0.00%

Loans to Local Financial Sector

5.81%

Valuation Adjustment

0.00%

Other Assets18.69%

Fixed Assets0.21%

Breakdown of BDL's Balance Sheet as at MidOctober 2016


$ Billion Mid October 2015

End of September 2016

Mid October 2016

Bi-Weekly (% change)

Y-O-Y (% change)

Total Reserves 48.94 52.83 52.36 -0.89% 6.99%Securities Portfolio 17.10 25.69 25.66 -0.10% 50.05%Loans to Public Sector 0.00 0.00 0.00 - -Loans to Local Financial Sector 4.83 5.93 6.03 1.58% 24.83%Valuation Adjustment 0.00 0.00 0.00 0.00% 0.00%Other Assets 21.35 19.42 19.37 -0.26% -9.30%Fixed Assets 0.23 0.22 0.22 -0.17% -4.07%Total Assets 92.46 104.09 103.64 -0.44% 12.10%Currency in C irculation Outside BDL 2.89 3.29 3.29 0.06% 13.99%Financial Sector Deposits 74.42 82.21 82.50 0.36% 10.86%Public Sector Deposits 4.95 6.97 6.81 -2.38% 37.50%Valuation Adjustment 5.29 6.75 6.07 -10.06% 14.78%Other Liabilities 1.52 1.37 1.47 6.69% -3.22%Capital Accounts 3.39 3.50 3.50 0.00% 3.26%Total Liabilities 92.46 104.09 103.64 -0.44% 12.10%Source: Banque Du Liban, Credit Libanais Economic Research Unit

Total Reserves

as a % of Year 2016 Short Term Debt* 470.02%

as a % of Gross Public Debt (1) 70.72%

as a % of Net Public Debt (1) 81.70%In months of Debt Service (2) 129.18

(1) As at End of August 2016(2) Average Monthly Debt Service as at End of June 2016Source: ABL, MOF, Credit Libanais Economic Research Unit

* Due to the unavailability of data on projected interest payments for the year 2016, this figure only includes principal repayments on Eurobond Securities and Treasury Bills

LEBANON NEWS

Weekly Market Watch

SOURCE: TRIPOLI PORT, AL BAYAN ECONOMIC MAGAZINE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 16

TRIPOLI PORT ACTIVITY IMPROVES BY 7.34% Y-O-Y BY AUGUST 2016

Freight activity via the port of Tripoli improved to just below 244 thousand tons during the month of August 2016, from around 143 thousand tons in July. On a cumulative basis, Tripoli Port freight activity conveys a 7.34% y-o-y increase to 1,246 thousand tons as at the end of the first eight months of 2016, compared to 1,160 thousand tons during that same period last year. This exceptional performance can be attributed to the closing of the Nassib border crossing between Syria and Jordan since April 2015, severing as such the last land export route for Lebanese producers and forcing them to rely instead on maritime exports. The number of vessels also rose by 2.88% annually to 536 by August, up from 521 vessels a year before. On the other hand, the number of imported cars via the Tripoli Port dropped by 15.97% on a yearly basis to 3,300, compared to 3,927 cars YTD August 2015. Consequently, port-related revenues (excluding VAT and customs) rallied by around 14% y-o-y to $10.06 million, compared to $8.83 million at end of August 2015.

Tripoli Port

Indicators Aug-2015 Aug-2016 Y-O-Y % Change

Freight Activity (000 Tons) 1,160 1,246 7.34%

Number of Vessels 521 536 2.88%

Number of Imported Cars 3,927 3,300 -15.97%

Port-Related Revenues ($ Million) 8.83 10.06 13.99%

For the Eight-Month Period Ending

Source: Port of Tripoli, Al Bayan Economic Magazine, Credit Libanais Economic Research Unit

Weekly Market Watch

SOURCE: BSE, BLC BANK, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 17

BSE APPROVES THE LISTING OF ADDITIONAL BLC BANK COMMON SHARES AND SERIES “D” PREFERRED SHARES

According to the Beirut Stock Exchange (BSE) circular no. 432/2016 published on October 17, 2016, the BSE approved BLC Bank’s decision to float all 750,000 preferred shares Class “D” in addition to 20 million newly issued common shares. On the one hand, BLC Bank increased its capital by LBP 60 billion ($39.80 million) in September 2016 from LBP 154 billion ($102.15 million) to LBP 214 billion ($141.96 million) through the issuance of 60 million common shares, LBP 1,000 par value each, distributed as share bonus to existing shareholders on a pro-rata basis. This capital increase was accomplished by transferring LBP 45 billion ($29.85 million) from the bank’s legal reserve account and LBP 15 billion ($9.95 million) from the free reserve account to the bank’s capital account. It is worth noting that BLC bank has opted to list 20 million out of the aforementioned 60 million newly issued shares. Simultaneously, the bank increased its capital by an additional LBP 750 million (around $497 thousand) from LBP 214 billion to LBP 214.75 billion ($142.45 million) by issuing 750,000 preferred shares “D” at an issue price of $100 per share and a share par value of LBP 1,000. The following table captures the most recent capital structure of the bank:

CORPORATE NEWS

Category Listing Status Number of Shares

Nominal Value per share (in LBP)

Total Value (in million LBP)

Common shares Listed 71,033,333 1,000 71,033.33Non-listed 142,066,667 1,000 142,066.67

Preferred shares (B) Listed 550,000 1,000 550.00Preferred shares (C) Listed 350,000 1,000 350.00Preferred shares (D) Listed 750,000 1,000 750.00Total 214,750.00Source: BSE, Credit Libanais Economic Research Unit

BLC Bank's New Capital Structure

MONETARY AGGREGATES

All monetary aggregates ended the week of October 6, 2016 on a negative note. In fact, the overall money supply, “M4”, plunged by LBP 578 billion on a weekly basis to LBP 204,817 billion, with a LBP 21 billion slump in the non-banking sector Treasury bills portfolio. In parallel, Lebanese-pound denominated deposits and currency in circulation, “M1”, narrowed by LBP 91.75 billion week-on-week to LBP 9,426 billion on the back of some LBP 354 billion drop in demand deposits, which outweighed the LBP 262 billion expansion in money in circulation. Local currency term deposits, “M2”, also lost some LBP 156.94 billion on a weekly basis, yet registered a 4.82% year-on-year increase to LBP 81,478 billion. Consequently, private sector term and saving deposits denominated in LBP (“M2- M1”) edged slightly lower to LBP 72,053 billion, with deposits denominated in foreign currencies (“M3–M2”) slipping to LBP 112,476 billion. MONEY MARKETS

The October 13th Treasury bill auction raised LBP 321.439 billion ($213.23 million), compared to LBP 243.461 billion ($161.50 million) in the auction of the previous week.

Subscriptions were majority (57.81%) concentrated in the three-year to maturity T-bonds, followed by the seven-year (34.47%) and six-month (7.72%) tenure bills.

Consequently, the weighted average yield on Lebanese Pound Treasury bills stood at 6.58% in the auction of October 13. The yields on the six-month, three-year, and seven-year to maturity Treasury securities remained flat at 4.99%, 6.50%, and 7.08% respectively.

MONETARY PERFORMANCE

Weekly Market Watch

SOURCE: BDL, REUTERS, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 18

3 Months

6 Months

12 Months

24 Months

36 Months

60 Months

84 Months

120 Months

180 Months

3.00%

4.00%

5.00%

6.00%

7.00%

8.00%

9.00%

0 1 2 3 4 5 6 7 8 9 10

On The Run Yield Curve

Lebanese Treasury Bills 3 Months 6 Months 12 Months 24 Months 36 Months 60 Months 84 Months 120 Months 180 MonthsTreasury Yield 4.44% 4.99% 5.35% 5.84% 6.50% 6.74% 7.08% 7.46% 7.90%

Lebanese Treasury Bills

Yield (%) Face Value (in billions

of LBP)

% of Total Face Value

6 Months 4.99% 24.823 7.72%36 Months 6.50% 185.811 57.81%84 Months 7.08% 110.805 34.47% Total 321.439 100.00%Source: Reuters, Credit Libanais Economic Research Unit

October 13, 2016

Mone y Supply

LBP Billion

M1 9 ,5 18 9 ,4 2 6 - 0 .9 6 %

M2 8 1,6 3 5 8 1,4 7 8 - 0 .19 %

M3 19 4 ,5 11 19 3 ,9 5 4 - 0 .2 9 %

M4 2 0 5 ,3 9 5 2 0 4 ,8 17 - 0 .2 8 %

M2 - M1 7 2 ,118 7 2 ,0 5 3 - 0 .0 9 %

M3 - M2 112 ,8 7 6 112 ,4 7 6 - 0 .3 5 %Source: Banque Du Liban, Credit Libanais Economic Research Unit

Se pte mbe r 2 9 , 2 0 16 Oc tobe r 6 , 2 0 16 % Cha nge

6,000

26,000

46,000

66,000

86,000

September29, 2016

October 6,2016

205,395 204,817194,511 193,954

Money Supply - LBP Billion -

M4 M3


LEBANESE EQUITIES

A multitude of factors helped shape up Beirut Bourse activity this week, most notably the tangible progress surrounding the presidential elections in Lebanon, which casted a breeze of optimism across investors, and block trades involving more than a million BLOM Bank listed shares. In fact, the number of shares changing hands soared to 2,691,863 shares, up from 134,790 shares last week, with value traded rallying to $30.04 million, from around $1.31 million a week before. The contribution of banking sector stocks of total weekly traded volume stood at 56.66% this week, compared to 50.61% last week.

In parallel, the average daily trading volume rose sharply to 538,373 shares this week, from 33,698 shares last week. Similarly, the average daily trading value widened to nearly $6.01 million, from about $0.33 million a week earlier. Nine gainers and four losers were screened this week, lifting the BSE’s market capitalization up by 4.05% week-on-week to just over $11.70 billion and the Credit Libanais Aggregate Stock Index (“CLASI”) higher by 3.88% to 1,136.69. The recent listing of 20 million BLC Bank common shares and 750 thousand BLC Bank Preferred shares Class “D” also contributed to said increases.

In the real estate sector, trades mainly comprised Solidere “A” and “B” shares (43.08% of total traded volume), with the price of Solidere “A” skyrocketing by 19.35% to $11.47 and that of Solidere “B” surging by 20.63% to $11.58. This exceptional hike in the prices of the Solidere stocks owes to glimmers of hope concerning the presidential elections. Consequently, the Credit Libanais Construction Sector Stock Index (“CLCI”) ended its week up by 18.19% at 640.04, recording on Thursday its highest level since October 20, 2014.

In the banking sector, BLOM Bank listed shares amassed the highest concentration of trades (41.20% of total traded volume) on a turnover ratio of 0.52%. The Credit Libanais Financial Sector Stock Index (“CLFI”) inched 0.37% higher this week to 1,452.03 amid the 1.00% appreciation in the price of BLOM Bank listed shares to $10.10 and the 0.78% rise in the price of BLOM Bank GDRs to $10.30, which altogether outweighed the 0.64% drop in the price of Bank Audi listed shares to $6.20, the 0.80% contraction in the price of Bank Audi GDRs to $6.20, and the 1.20% decrease in the price of Byblos Bank listed shares to $1.64.

LEBANESE EQUITIES

Weekly Market Watch

SOURCE: BSE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 19

Credit Libanais Week of Week of Weekly YTDIndices 14-Oct-16 21-Oct-16 % Change % ChangeCredit Libanais AggregateStock Index <.CLASI> 1,094.23 1,136.69 3.88% 6.45%

Credit Libanais FinancialSector Stock Index <.CLFI> 1,446.71 1,452.03 0.37% 4.73%

Credit Libanais ConstructionSector Stock Index <.CLCI> 541.53 640.04 18.19% 12.91%

1,000

1,020

1,040

1,060

1,080

1,100

1,120

1,140

1,160

21-O

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Credit Libanais Aggregate Stock IndexWeekly Performance

CLASI

CLASI 3.88%

1,300

1,320

1,340

1,360

1,380

1,400

1,420

1,440

1,460

1,480

21-O

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Credit Libanais Financial Sector Stock IndexWeekly Performance

CLFI

CLFI 0.37%

450

500

550

600

650

700

21-O

ct-1

5

12-D

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5

02-F

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6

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Credit Libanais Construction Sector Stock IndexWeekly Performance

CLCI

CLCI 18.19%

.CLASI Credit Libanais Aggregate Stock Index

Value Daily % Chng Daily Net Chng

1,136.69 -0.473% -5.40

Yr.High Year Hi.Date Yr.Low Year.Lo.Date

1,145.94 20-Oct-16 1,065.48 9-Mar-16

Life High Life Hi.Date Life Low Life.Lo.Date

1,801.01 7-Jul-08 836.11 25-Mar-09

Friday, October 21, 2016

The weighted average price to earnings (P/E) and price to book (P/BV) multiples of listed stocks regained their upturn after last week’s drop, ending Friday’s session significantly higher at 9.714x and 0.915x respectively.

LEBANESE EQUITIES

Weekly Market Watch

SOURCE: BSE, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 20

P/E P/BV

Solidere A $11.47 19.35% 782,234 29.06% $9,157,120 30.48% 100,000,000 $1,147,000 13.18 0.94 3.71%Solidere B $11.58 20.63% 377,508 14.02% $4,412,040 14.69% 65,000,000 $752,700 13.31 0.95 4.61%BLC Bank $1.69 0.00% - - - - 71,033,333 $120,046 8.45 0.68 -0.59%BLC Bank Preferred Class "B" $100.00 0.00% - - - - 550,000 $55,000 n.a n.a -2.44%BLC Bank Preferred Class "C" $100.00 0.00% - - - - 350,000 $35,000 n.a n.a -0.99%BLC Bank Preferred Class "D" $100.00 0.00% 1,900 0.07% $190,000 0.63% 750,000 $75,000 n.a n.a 0.00%Bank Audi - Listed Shares $6.20 -0.64% 37,686 1.40% $233,703 0.78% 399,749,204 $2,478,445 6.14 0.87 2.48%Bank Audi GDR $6.20 -0.80% 20,320 0.75% $129,365 0.43% 114,988,117 $712,926 6.14 0.87 3.33%Bank Audi Preferred "F" $100.50 0.00% - - - - 1,500,000 $150,750 n.a n.a -1.18%Bank Audi Preferred "G" $101.80 1.09% 7,500 0.28% $763,500 2.54% 1,500,000 $152,700 n.a n.a 0.79%Bank Audi Preferred "H" $101.00 0.00% - - - - 750,000 $75,750 n.a n.a -0.49%Bank Of Beirut - Listed Shares $18.80 0.00% - - - - 17,746,417 $333,633 10.93 1.27 0.00%Bank Of Beirut Priority Shares 2014 $21.00 0.00% - - - - 4,762,000 $100,002 12.21 1.42 0.00%Bank Of Beirut Preferred "H" $26.25 5.00% 12,650 0.47% 329,638 1.10% 5,400,000 $141,750 n.a n.a -0.94%Bank Of Beirut Preferred "I" $26.00 0.00% - - - - 5,000,000 $130,000 n.a n.a -1.89%Bank Of Beirut Preferred "J" $26.00 0.00% - - - - 3,000,000 $78,000 n.a n.a 0.97%Bank Of Beirut Preferred "K" $25.00 0.00% - - - - 4,000,000 $100,000 n.a n.a 0.00%Byblos Bank - Listed Shares $1.64 -1.20% 48,010 1.78% $79,030 0.26% 565,515,040 $927,445 9.11 0.76 1.86%Byblos Bank Preferred Class 2008 $101.10 0.10% 3,415 0.13% $345,651 1.15% 2,000,000 $202,200 n.a n.a -0.10%Byblos Bank Preferred Class 2009 $101.40 0.30% 3,100 0.12% $314,330 1.05% 2,000,000 $202,800 n.a n.a 0.80%Byblos Bank GDR $79.00 -1.25% 185 0.01% $14,615 0.05% 1,309,078 $103,417 8.78 0.73 -1.25%BEMO Bank - Listed Shares $1.72 0.00% - - - - 51,400,000 $88,408 8.60 1.06 -9.47%BEMO Bank Preferred Class 2013 $100.00 0.00% - - - - 350,000 $35,000 n.a n.a 0.00%BLOM Bank GDR $10.30 0.78% 199,677 7.42% $2,054,123 6.84% 73,896,010 $761,129 11.84 0.91 5.64%BLOM Bank Listed Shares $10.10 1.00% 1,109,105 41.20% $11,096,108 36.94% 215,000,000 $2,171,500 11.61 0.89 7.45%BLOM Bank Preferred Class 2011 $10.00 0.00% 81,670 3.03% $816,700 2.72% 20,000,000 $200,000 n.a n.a -1.48%RYMCO Class "B" $3.25 0.00% - - - - 10,920,000 $35,490 14.13 1.67 0.62%Holcim Liban $15.87 10.44% 6,903 0.26% $104,490 0.35% 19,516,040 $309,720 7.1 1.31 9.30%Ciment Blancs Bearer $2.70 0.00% - - - - 6,000,000 $16,200 4.91 1.23 -30.77%Ciment Blancs Nominal $3.10 0.00% - - - - 3,000,000 $9,300 5.64 1.41 0.00%

Lebanese Equities

BEIRUT STOCK EXCHANGE

Weekly Value Traded

Total Listed Shares

Weekly %Change

Closing

Source: Beirut Stock Exchange, Credit Libanais Economic Research Unit

% of Weekly Volume Traded

% of Weekly Value Traded

Note: n.a stands for not applicable

Market Capitalisation

($000) YTD Price

Perf.

Weekly Volume Traded

Previous Last % ChangeValue Traded ($) 1,308,950 30,040,412 2195.00%Volume Traded 134,790 2,691,863 1897.08%Average Daily Trading Value ($) 327,237 6,008,082 1736.00%Average Daily Trading Volume 33,698 538,373 1497.66%Market Cap - BSE ($) 11,246,283,660 11,701,310,648 4.05%Weighted Average P/E 9.212 9.714 5.44%Weighted Average P/BV 0.885 0.915 3.42%

Activity Analysis

Source: Beirut Stock Exchange, Credit Libanais Economic Research Unit

Source: BSE, Credit Libanais Economic Research Unit

0

2

4

6

8

10

Oct 14, 2016 Oct 21, 2016

9.2129.714

0.885 0.915

Evolution of Beirut Bourse Comparable Benchmarks

P/E P/BV

LEBANON’S MAIN INDICATORS

Weekly Market Watch

SOURCE: BDL, ABL, MOF, IMF, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 21

2 0 0 9 2 0 10 2 0 11 2 0 12 2 0 13 2 0 14 2 0 15 2 0 16

MACROECONOMIC INDICATORS

GDP ($ Billion) 35.14 38.01 40.08 44.10 47.60 49.94* 51.17* 52.80*

Real GDP Growth Rate 10.30% 8.00% 0.90% 2.80% 2.50% 2.00%* 1.00%* 1.00%*

GDP Per Capita ($) 8,274 8,756 9,144 9,966 10,655 11,073* 11,237* 11,484*

Net Foreign Direct Investment ($ Billion) 4.84 4.96 3.40 2.30 3.79

FDI/GDP Ratio 13.77% 13.05% 11.79% 7.86% 12.71%

INDUSTRY

Industrial Exports ($ Million) 2,595 3,291 3,530 2,952 3,076 3,150 2,956 1,301 (4)

Import of Industrial Machinery ($ Million) 199 227 239 288 300 269 234 131 (4)

TOURISM

Total Number of Tourists 1,851,081 2,167,989 1,655,051 1,365,845 1,274,362 1,354,647 1,517,927 955,813 (5)

Growth in Tax- Free Spending 13% 21% 10% - 6% 4% 8% 2% - 10% (7)

REAL ESTATE

Value of Real Estate Transactions ($ Million) 6,958 9,479 8,841 9,175 8,708 8,952 8,006 5,389 (6)

Number of Real Estate Sales Transactions 83,465 94,202 82,984 74,569 69,198 70,721 63,386 40,587 (6)

Construction Permits (000 sqm) 11,509 15,187 13,980 12,362 10,527 11,164 10,294 7,483 (7)

Cement Delivery (000 tons) 4,897 5,227 5,550 5,309 5,831 5,517 5,043 3,414 (6)

TRANSPORTATION

Beirut Port: Freight Activity (000 Tons) 5,769 6,469 6,677 7,225 8,268 8,281 7,240 6,600 (7)

Beirut Airport: Number of Passengers (million) 4.74 5.55 5.65 5.96 6.26 6.57 8.22 5.08 (6)

FOREIGN TRADE

Imports ($ Million) 16,242 17,964 20,158 21,280 21,228 20,494 18,069 12,792 (6)

Exports ($ Million) 3,484 4,253 4,265 4,483 3,936 3,313 2,952 1,974 (6)

Trade Balance ($ Million) (12,758) (13,711) (15,893) (16,797) (17,292) (17,181) (15,117) (10,818) (6)

BALANCE OF PAYMENTS

Net Foreign Assets at the Financial Sector ($ Million) 7,899 3,325 (1,996) (1,537) (1,127) (1,407) (3,354) 366 (6)

Foreign Assets ($ Billion) 28.30 30.85 32.24 35.74 35.29 37.86 37.09 40.77 (9)

PUBLIC FINANCE

Government Expenditures ($ Million) 11,388 11,336 11,675 13,321 13,640 13,952 13,528 7,273 (4)

Government Revenues ($ Million) 8,428 8,414 9,333 9,396 9,420 10,879 9,576 5,337 (4)

Budget Primary Defic it / Surplus ($ Million) 3,380 1,203 1,662 (110) (240) 1,307 724 495 (4)

Total Defic it ($ Million) (2,960) (2,894) (2,342) (3,925) (4,220) (3,073) (3,952) (1,936) (4)

Defic it / GDP Ratio 8.42% 7.61% 5.84% 8.90% 8.87% 6.14% 7.26%

Debt Service / GDP Ratio 11.49% 10.85% 9.99% 8.21% 7.96% 8.75% 8.60%

Net Public Debt ($ Billion) 44.11 45.01 46.35 49.12 53.18 57.30 61.54 64.09 (6)

Gross Public Debt/GDP Ratio 145.57% 138.39% 133.89% 130.80% 133.36% 133.28% 139.08%

MONETARY AGGREGATES & INFLATION

M4 ($ Billion) 87.08 97.31 103.50 110.00 117.41 124.53 131.17 135.87 (8)

(M2- M1) ($ Billion) 31.14 35.66 35.82 39.32 40.56 43.27 46.25 47.80 (8)

Monetization Level (M2/GDP Ratio) 97.35% 103.46% 99.32% 99.44% 95.68% 97.34% 101.74%

Change in CPI (%) 4.20% 6.19% 4.27% 4.68% 2.05% - 1.66% - 3.40% 1.03% (7)

BANKING SYSTEM

Number of Commercial Banks 53 54 54 54 56 55 53 53 (1)

Number of Branches 885 912 948 962 985 1,020 1,039 1,039 (1)

Total Assets ($ Million) 115,250 128,925 140,576 151,883 164,821 175,697 185,989 195,774 (6)

Total Deposits ($ Million) 96,821 108,601 117,703 127,657 139,166 147,637 154,951 160,417 (6)

Loans to the Private Sector ($ Million) 28,374 34,929 39,375 43,452 47,381 50,899 54,224 56,448 (6)

Customer Loans/ Deposits 29.31% 32.16% 33.45% 34.04% 34.05% 34.48% 34.99% 35.19% (6)

Dollarization Rate 64.46% 63.24% 65.92% 64.82% 66.10% 65.71% 64.88% 64.76% (6)

Net Profit - After Tax ($ Million) 1,429 1,838 1,743 1,620

Exchange Rate (LBP to USD) 1,507.50 1,507.50 1,507.50 1,507.50 1,507.50 1,507.50 1,507.50 1,507.50

* Figures Reflect IM F Estimates

(1) As at End of M arch, 2016, (2) As at End o f April, 2016, (3) As at End o f M ay, 2016, (4) As at End of June, 2016, (5) As at End of July, 2016, (6) As at End o f August, 2016, (7 ) As at End of September, 2016

Recap of Lebanon's Major Indicators

(8 ) As at October 6, 2016, (9 ) As at M id-October, 2016

LEBANON’S RATINGS

Weekly Market Watch

SOURCE: S&P, MOODY’S, FITCH, CREDIT LIBANAIS ECONOMIC RESEARCH UNIT 22

Rating Agency Tenor Rating

Long- Te rm B-

Short- Te rm B

Moody's Inve stors Se rvic e Long- Te rm B2

Fitc h Ra tings Long- Te rm B-

Short- Te rm B-

Source: S&P Global Ratings, M oody's Investors Service, Fitch Ratings

Stable

S table

Ne ga tive

Republic Of Lebanon Sovereign Ratings

Outlook

Sta nda rd & Poor's Globa l Ra tings

Rated Banks

Long Term Foreign Currency

Financial Strength

Outlook Long Term

IDR

Outlook Long-Term Counterparty Credit Rating

Short-Term Counterparty Credit Rating

Outlook

Bank Audi B2 E+ Negative B- Stable B- C Stable

BLOM Bank B2 E+ Negative - - B- - Stable

Credit Libanais - - - - - - - -

Byblos Bank B2 E+ Negative B- Stable - - -

BBAC - - - - - - - -

Fransabank - - - - - - - -

BankMed - - - - - B- C Stable

S&P Global Ratings

Lebanese Banks' Latest Ratings

Moody's Investors Service Fitch Ratings

Sources: M oody's Investors Service, Fitch Ratings, S&P Global Ratings

CONTACTS

RESEARCH

Fadlo I. Choueiri, CFA

[email protected]

961-1-608 000 EXT: 1280 Jad Abi Haidar, CFA [email protected] 961-1-608 000 EXT. 1283

Joelle Samaha [email protected] 961-1-608 000 EXT. 1281 Mayda Zaarour [email protected] 961-1-608 000 EXT. 1282

MONEY MARKETS DESK

Robert Araman

[email protected]

961-1-608 000 EXT. 0760

This document is being furnished to you solely for your information and may not be reproduced or redistributed to any other person. This document does not constitute an offer or invitation to subscribe to or purchase any security, and neither this document nor anything contained herein shall form the basis of any contract or commitment whatsoever. Reasonable care has been taken to ensure that the facts stated herein are accurate and the estimates, opinions and expectations contained herein are fair and reliable.

Weekly Market Watch

ECONOMIC RESEARCH UNIT - ADLIEH, BEIRUT LEBANON - TEL: 01-608000 FAX: 01-608231 23

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Weekly Market Watch Economic Research Unit · 2016-10-24 · Economic Research Unit Credit Libanais Headquarters Adlieh Beirut, Lebanon Tel +961.1.608000 Fax +96.1.608231 [email protected]