The stock of property developer Solidereis by far the most prominent on the bourse, accounting for some 59 per cent of market capitalisation, and the company’s ups and downs move the market. For most of the year the trajectory has been upwards, spurred by a deal whereby gold-dust real estate in the Beirut Central District could be bought at a discount with shares instead of cash. Correspondingly, the benchmark BSI index has climbed by more than 30 per cent since the start of the year.

Investor confidence suddenly waned when Hariri – Solidere’s owner – resigned with his cabinet in late October. But the downturn was surprisingly short-lived. ‘Solidere shares recovered swiftly on the back of the release of soaring nine-month results,’ says a Beirut-based analyst. ‘And the market as a whole steadied quickly.’

Investors on the BSE are no doubt inured to political shenanigans, but they at least provide some excitement. Middle Eastern bourses are generally immature but Beirut’s lags even that of the Palestinian Stock Exchange in activity. The latest report from the local Blominvest, covering the period 1-6 November, recorded – as well as the fact that Lebanon ranks 24th in the world for the number of aesthetic plastic surgery procedures – a single trade of banking sector stock, in Byblos Bankshares. Trading on the bourse has picked up in the past three months, but its June peak was a mere $27 million. And no new listings or initial public offerings are on the horizon.

The bond market has been a greater source of interest in recent months. In May, Beirut returned to the eurobond market for the first time since the 2002 Paris II donors’ conference, staging a seven-year, dollar-denominated issue worth $1,000 million, and a five-year, Eur 225 million ($270 million) issue – both achieving notably tight pricings for emerging market instruments and particularly for a government burdened with debt of more than 180 per cent of gross domestic product (GDP). In late August, Beirut staged its biggest ever eurobond swap, succeeding in exchanging $1,186 million-worth of dollar-denominated bonds for two new issues priced more cheaply.

Secondary market activity has been muted but there are some positive signs. ‘There has been some demand for medium-long-term paper, less for short-term,’ says the analyst. ‘The government is now talking about swapping some of the instruments due in 2009 and 2012.’ Investors may lack confidence in the political system, economic reform and the moribund privatisation programme, but they apparently trust Beirut to pay its debts.

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