- 31
- Jan.
- 2024
It seems that the Beirut Stock Exchange is the next victim of the creeping state genocide. In reality, it's not the stock exchange itself that's directly targeted; it should continue to operate, but rather the Capital Markets Authority, which oversees its management. Persistent information and rumors indicate a forced and collective resignation of most of the staff.
The first reason for this announced suicide is that there's no more money to maintain the forty or so employees there. The second reason is that, anyway, these employees have almost nothing to do, and one might be tempted to say they've never had much to do, despite the competence of some of them. We don't know how they spend their time, probably just passing it by playing with beads while they comment on the nothingness of the day over a cup of bitter coffee.
Because, let's face it, the stock exchange has never really taken off since its reopening in 1996. Over these 27 years, it limped along, with barely a dozen listed companies, but only four of them are truly active (Solidere and the banks Audi, Byblos, and BLOM). On sunny days, there were about thirty transactions. By comparison, the Amman Stock Exchange has 167 listed companies or securities and an average of 3,000 transactions per day... with only 58 employees.
In short, we're still at the bottom of the Arab list. To add to your despair, let's remember that our stock exchange, born in 1920, was the second in the region, after Egypt, and maintained a leading position for decades, with, in the 1960s, over fifty companies listed.
The reasons for the post-war disenchantment can be grouped into two categories. First, it doesn't follow, or no longer follows, the standards of the stock market; it lacks both a special court and a sanctions structure in case of infringement.
Second, it didn't attract the interest of large companies, which always opted for bank loans to finance themselves. Whether it is a question of timidity or oversized egos, bosses didn't want foreigners poking their noses into their internal affairs, whereas going public obliged them to be transparent.
Since the crisis, it's been another episode of agony. Bank shares have followed the decline of the sector. Solidere's stock, on the other hand, has multiplied by 15 — a way for depositors to transfer some of their money locked in banks to a company that still has millions of square meters of buildable land. It's something gained, even if all these stock actions are denominated in "lollars."
The stock market deficiency is not a trivial anecdote, isolated from the economy. Its anemic state even contributed to the crisis: in developed or emerging countries, people invest a good portion of their savings in the stock market. Since this alternative almost didn't exist in Lebanon, all the savings went to banks, resulting, in 2018, in deposits three times the country's GDP, almost a global record.
And the catch was there: what could banks do with this mountain of deposits? They multiplied credit offers until the market was saturated. But there were still tens of billions of dollars in deposits, which banks, for lack of alternatives, deposited with the central bank, which went bankrupt, dragging banks and depositors into the ditch. A morbid chain reaction.
Now that we're wallowing in the pit, what can we do to get out by putting the stock market to work? The basic idea is to introduce state entities into the stock market after corporatization — a term to stumble upon in the dictionary, meaning to transform a public establishment into a joint-stock company, then place some of its shares on the stock market, even if an international operator manages the activity.
There were even two laws passed in 2002 in this direction for electricity and telecommunications, but they were never applied. Nevertheless, if they had been, you would have missed out on the breathless suspense that former Minister of Energy, Walid Fayad, maintains every month around the possibility of that Iraqi tanker docking before our reserves run out, or missed the emotional rollercoaster of Ogero's failing 1G internet network.
To contribute to crisis resolution, the stock market must first be privatized itself, as envisaged by the former governor of the Central Bank of Lebanon. Then, we can and must return to the main idea of corporatizing and listing state entities with commercial character on the stock market (including ports, airports, casinos, the Regie, MEA, Intra, EDL, Ogero, and real estate companies exploiting state lands). Priority can even be given to aggrieved depositors to buy shares with their "lollars," which, backed by real physical values, will at least have a value they lost since 2019.
The idea is advocated by several economists. But, at the highest level, they prefer to continue the liquidation work. It's so much easier to destroy what's left of the state, one piece at a time.
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