BEIRUT: Beirut stocks brace helplessly for the impact of a potential Cabinet collapse amid intensifying political tensions. Economists and traders say Solidere’s shares, already down 27 percent in 2011 through Nov. 25, stand to lose in the week following a possible resignation by Prime Minister Mikati during Wednesday’s Cabinet session.

“Of course if the government falls we will see a sell-off and since Thursday, investors have been worried,” said Carole Sassine, chief dealer at Credit Commercial et Foncier in an interview with The Daily Star.

Average daily traded shares already more than doubled to 164,431 during the week ending Nov. 25 compared to the previous two weeks. The BLOM Stock Index retreated 0.66 percent to 1,167.01 points during the four trading days, sinking the index further to a 21 percent loss year-to-date.

Banks were little affected by developing political crises at the ministerial and Syrian levels, while Solidere, the real estate developer of Downtown Beirut, was in focus as rising volumes drove the stock down 1.7 percent to $13.41 during the week and the market capitalization down to $10.22 billion.

“I am more hopeful for Solidere than for the banks. Solidere is a piece of Beirut bound to go up – when, I don’t know,” said Louis Hobeika, professor of economics at Notre Dame University in an interview with The Daily Star.

The steady decline across the majority of securities on the Beirut Stock Exchange since the collapse of the national unity government is not expected to spare stocks the bitter taste of the looming crisis, and the focus is on the more liquid and politically sensitive Solidere shares.

The stock shed 11.7 percent in the aftermath of former Prime Minister Saad Hariri’s Cabinet resignation, painting a bleak outlook for Solidere in coming weeks.

But Sassine said the scenario may be different this time around, depending on the identity of the next government. “Markets act differently every time, depending on uncertainty and on who may come to power next,” he added.

In fact, Mikati’s term has so far seen Solidere’s A shares drop 27 percent since he formed his Cabinet on June 13, compared to the BSI’s 14.5 percent consistent decline.

The only positive note since then has been the appointment of Salameh for a fourth term as governor of the Central Bank, buoying Solidere and the BSI temporarily up 9.8 percent and 2.5 percent respectively.

To Hobeika, the possible sell-off would have no impact on national wealth because of the size of the stock exchange, but would make the shares of the BSE’s real estate developer even more attractive for long-term investors. “I advise investors to be patient and consider long-term returns unless they have urgent liquidity needs. When stocks fall, I would buy Solidere shares.”