By By Nabila Rahal -- arabianbusiness.com -- S&P Dow Jones Indices (S&P DJI) is in the midst of a consolation with market participants on potentially excluding Lebanon-domiciled stocks from the S&P Frontier BMI and related sub-indices, as well as the S&P Pan Arab Indices. Four of Lebanon’s biggest listed companies – Bank Audi, BLOM Bank, Byblos Bank and Solidere, the Lebanese Company for the Development and Reconstruction of Beirut Central District – would be affected if the decision passes. Some industry experts in Lebanon, however, believe that given the current economic crisis the country in passing through, and its dire consequences on the private sector, the impact of these changes will be negligible.

"Pulling a few Lebanese stocks out of any index, whether Pan Arab or Frontier Markets, really is a sideline issue in the context of the troubles we are faced with in Lebanon, where our challenges range from fighting corruption and making efficient reforms in the public sector to solving the problems of international transactions and the exchange rate for private sector enterprises," said Thomas Schellen, editor at large of Executive Magazine, a Lebanese business-focused publication. S&P DJI has already taken measures to address ongoing market accessibility issues in Lebanon caused by the imposition of capital controls back in March. In a statement on April 30 S&PDJI stated that it “continues to monitor the situation but substantive progress does not appear to have been made to address the accessibility issues caused by these controls.” Given the situation in the country regarding foreign currency shortages and fund repatriation concerns, S&P DJI is proposing to remove index constituents domiciled in Lebanon from the S&P Pan Arab Indices. Additionally, S&P DJI is proposing to reclassify Lebanon from a frontier market to a standalone market, and consequently remove all constituents from the S&P Frontier BMI and related sub-indices.

Lebanese stocks would instead only be included in a separate S&P Lebanon BMI standalone. Under these proposals, S&P DJI would remove Lebanon-domiciled constituents from the indices at a zero price given the distortion between the parallel and official exchange rates for the Lebanese Pound and in order to facilitate index replicability. If adopted, S&P DJI is proposing to implement these changes prior to the market open on June 21, in conjunction with the upcoming rebalancing.