|After eleven years of absence, the Beirut Stock
Exchange returns with remarkable energy. Because the stock exchange will play an important
role in the success of the reconstruction process, we are posting this interview with
Gabriel Sehnawi, head of the stock exchange committee who is an expert in the field of
Priorities and goals :
Sehnawi said that the stock exchange will return to Lebanon soon. " The
priorities of this market are based on economic and construction plans which are now in
the first stages of execution and the stock exchange is one of the basic financial tools
for stimulating the economy by attracting capital for investment in the projects,"
He added that the stock exchange also helps to revive other sectors of the
economy such as tourism by participating in the expansion of Beirut's International
Airport and the Sea port. In addition and with the region on the threshold of peace,
Lebanon must be prepared for all the implications of the impending era, including economic
liberalization which will no doubt act to support the internal economy.
Attracting foreign capital is the key :
Sehnawi pointed out that according to economic studies Lebanon will need between
$ 10 to 20 billion during the next ten years for reconstruction and around $5 billion to
raise the capital of companies to accepted levels. "The stock exchange will play
an important role in attracting investment to Lebanon particularly at the present time,
when international companies have shown serious interest in the country as an important
place for investment, " he said.
As for stock dealing in the Beirut stock exchange, Sehnawi said: "Solidere
shares, which are now traded in the secondary market, will be included in the stock
exchange. There are also six or seven stocks which were previously listed, in addition to
treasury bonds in Lebanese pounds and leading company bonds. New companies are also
expected to join either to raise new capital or to enhance their company image".
Sehnawi noted that the Beirut stock exchange may not be able , at the beginning,
to abide by international stock exchanges regulations. It may require listed companies to
present their balance sheets within six months or even twelve but will strictly enforce
the principles of disclosure requiring all new projects and targets to enable analysts to
evaluate companies and give appropriate advice to their clients.
The stock exchange will also list companies with small capitals as well as Arab
and foreign companies subject to specific conditions. Naturally, the stock exchange will
wish join the linkage system between the region's stock exchanges and, at a later stage,
with international stock exchanges.
Referring to Arab stock exchanges, Sehanwi said: " These range from the
advanced to the ordinary. There are exchanges which offer little opportunity for foreign
participation and others that continue to bar foreigners. freedom of exchange is permitted
in some stock exchanges and forbidden in others. But the Arab exchanges will embark a
development program to liberalize exchange rules to insure improved production".
Sehnawi went on to say that the Beirut stock exchange has its advantages, mainly
the law concerning foreign ownership, and the unrestricted freedom to transfer money and
buy stocks without payment of any taxes on these transactions.
There are also new tax laws which lowered company taxations rates to ten
percent. This will encourage foreign companies to return to the country and local ones to
avoid tax evasion.
"There are also new laws regulating the work of insurance companies and
others, under consideration, related to trade, merger and holding companies. The
establishment of a free zone in Beirut port is under consideration. As for the human
element, a lot of highly qualified people who held very important positions in
international institutions and banks have returned to Beirut and the exchange will employ
their experiences, expertise and contacts with the outside world to improve its
performance ," Sehnawi said.
He spoke about the expected Israeli competition in the impending era of peace in
the region . He said that Israel's stock exchange is one of the most important in the
region. It lists stocks of leading international companies which rival Arab companies in
the field of electronics, but there will be enough work for everybody. Israel's stock
exchange will not present dangerous competition but a practical one, it is worth pointing
out that Israel imposes heavy taxes including the increase of taxes on stock dealings
which took place a few months ago and led to the deterioration of the exchange by 5 to 10
%. In addition, the presence of strong Arab stock exchange in Bahrain, Oman, Kuwait and
Saudi Arabia is to be reckoned with.
Optimism is in order.
The head of the Beirut exchange expressed his optimism in the future. He said
that Lebanon had not lost nor will it lose its financial and economic role in the region.
he explained that foreign interest in Lebanon was apparent during the meeting of the
International Monetary Fund in Madrid and by visiting delegations.
Sehanwi said" the most important thing is to invest in this interest at
the right time and place. We should not tarry because the chance may thus be missed and
the opportunity seized by other countries in the region. Contacts are in progress with a
number of western countries, particularly with officials in Paris, London and Tokyo stock
exchanges and offers of technical help have been received. Contacts are also being made
with the world Bank and I.F.C with a view to developing existing exchange laws to conform
with progress, and to computerize and join the linkage systems between exchanges. One of
the advanced technologies understudy, a "Reuter" project which is based on
linking the exchange to the Central Bank, banks, Lebanon's Finance Company, for
facilitating work and decreasing costs.
Beirut stock exchange will return soon. Preparations are not restricted to
the opening but extend to insuring an important presence for it is the oldest in the East,
and has a long history which must be preserved."
The Beirut Exchange: a short history
It was established by a government decree on the 2nd of July 1920. dealings
concentrated mostly on gold and foreign exchange. This market, which was the first in the
Middle East, attracted investments fro France and Syria in addition to Lebanon. dealers
included the mixed French-Syrian-Lebanese concessionaires of public utility companies,
namely : Beirut Electricity, Aleppo Electricity, Latakia Asphalt and Petroleum, Beirut
Port Company, Damascus and Hama Rail Road Company, Beirut Water Company, Radio Orient,
Regie Company and Lebanese French Real Estate Company.
All these companies were listed in both Beirut and Paris stock exchanges. the
Paris exchange set stock to prices. The Beirut stock exchange worked for 34 years without
any regulations to govern its operations, until the Lebanese parliament in 1945 enacted
such a law. It was amended in 1959, 1961, 1969, 1982 and 1985. Stock exchange closed down
in 1983 like so many other Lebanese institutions as a result of the war. Now the exchange
stands poised to resume its interrupted life to contribute its share in the reconstruction
process in the country.