Stock market volume down

Downside in prices and low volume "not unusual"

Total trading volume on the Beirut Stock Exchange was down 30 percent in the first nine months of the year from the same period last year to reach 44.5 million shares. The most traded stocks were bank stocks, accounting for 76 percent of total trading volume, followed by real estate at 18 percent.

Total BSE turnover was $339 million in that period, down 24 percent year-on-year.

“It is not surprising that volume and activity are down, this is related to the general situation in the region, there is no one particular event or reason that caused it,” said Toufic Karam, a market trader at FFA Private Bank. He said he has not seen any unusual transactions on the market.

Market capitalization also dropped by some six percent from September 2011 to reach $10 billion, 75 percent of which are banking stocks, and 20 percent real estate (Solidere) stocks.

“The small number of listed companies on the BSE is affecting the activity, investors have limited choice. The downside in prices and low volume is not unusual in the current situation,” said Karam. He said that privatization of the BSE would help a lot.

The capital markets law stipulates that the BSE should be privatized by end-September 2013. Ghaleb Mahmasani, vice-president of the BSE, said the Financial Markets Authority has begun taking the necessary measures to encourage local firms to list their stocks on the BSE.

“The first step is to turn the BSE into a stock company owned by the State. The State will, at a later stage, sell the BSE to the private sector,” Mahmasani said. The Financial Markets Authority shall decide, with the government, how the privatization is to be carried out.

The law also states that the authority shall set the regulatory framework for listing financial instruments, for issuing licenses to brokers and financial rating agencies, and for licensing collective investment schemes. The authority is also tasked with protecting investors from illegal practices, issue fines for violations of the capital markets law, and initiate legal action against insider trading crimes.