All we ever get to read about Lebanon has to do with death and destruction. First it was the civil war that ended in 1990 and devastated the country, and now even though peace is within its borders, the country has to contend with the conflict in Syria.
The byproduct of that war has been a massive influx of refugees which has placed a great strain on Lebanon’s economy. GDP growth, as can be expected, has plunged from 10% in 2008 to about 1% year over year in 2015. I imagine it will keep its downward trajectory as long as the Syrian war continues.
However, having said that, there are a couple of positive movements in the economy, one actually being a byproduct of the Syrian war.
The industry that’s booming there is the tobacco industry. As an article from the Daily Mail describes, “At Lebanon’s main tobacco factory, located southeast of the capital, Beirut, employees work round-the-clock but can barely cover the high demand for locally-made cigarettes.”
Apparently the biggest beneficiary of this tobacco boom is a state-owned company nicknamed Regie, and as the Daily Mail states, it’s really one of the only institutions putting money into the country’s coffers. Unfortunately, the company isn’t listed on the Beirut Stock Exchange.
But there is one company that is listed both on the Beirut Stock Exchange (SOLA) and the London International Exchange (SLED) and, in my opinion, warrants a place on any developing markets investor’s watch list. The company is Solidere SAL, and they are involved in the real estate and construction industry. What impressed me most about this company was that it was originally founded in 1994 with the sole mission to rebuild central Beirut after it had been devastated by civil war.
Since then, however, the company has grown and now has real estate projects in Saudi Arabia and the Emirates under the Solidere International name. Because there is still so much rebuilding to be done in Lebanon, and much of the infrastructure remains in ruins, Solidere has positioned itself to become the leading construction company using public private partnerships to reconstruct the country. And due to the fact that this is such a long-term project, it puts Solidere in a position for a very bright future.
Peter Kohli is the CEO of emerging market specialist DMS Funds.
As seen originally: http://www.nasdaq.com/article/frontier-markets-lebanons-hopeful-future-cm668282