Lebanese reforms caught in the crossfire

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Lebanese reforms caught in the crossfire

Israel’s conflict with Hizbullah began just as Lebanon was finding its feet again following the assassination last year of former prime minister Rafik Hariri. The government was in the middle of a series of reforms that it hoped would provide the capital markets with a bigger role in the country’s economic story. Those reforms are now on hold but it is imperative that they are implemented as soon as circumstances allow. Sudip Roy reports from Beirut.

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“I’M LOOKING AT my screen,” says the senior investment banker in Beirut. “There are more buy orders than sells.” The bombs are falling but business goes on in Lebanon. It’s far from business as usual, though. The banker says that just before speaking to Euromoney he was on the phone to his wife, discussing the possibility of her and their children moving abroad while the war continues. He says he will be alright; he has his work to preoccupy him.

It is several days into the conflict between Israel and Hizbullah. The Beirut stock exchange has come under heavy pressure, with the price index down by almost 11% in the week beginning July 10. Nearly all the gains made this year have been wiped out. Now, though, investors are sniffing buying opportunities again. The banker says that his screen shows all buy orders for Solidere, Lebanon’s biggest stock.

Just a couple of days later, the stock market is closed for two weeks. When it reopens the authorities place a 5% limit on the amount shares can rise or fall.

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