The Beirut port disaster provoked international sympathy for Lebanon but not enough to revive chances of an economic bailout, European diplomats and Middle East bankers said on Thursday.
"There is a big awareness that any penny in cash will go to enrich the coffers of a corrupt state and to engorge the fortunes of the kleptomaniac political class," a senior international banker in Dubai told The National.
At least 2,750 tonnes of ammonium nitrate blew up just east of the city centre on Tuesday, killing at least 145 people and destroying parts of the capital.
Arab and western nations were quick to send medical aid and other basic assistance.
Before the tragedy, most of the Lebanese political class was seeking “a bailout for a failed state”, the banker said, without serious changes to a system in which the currency was devalued and the economy crushed.
He expected the international assistance would go much beyond aid for the thousands of Lebanese wounded or left homeless, and possibly some rebuilding aid for damaged districts in Beirut.
French President Emmanuel Macron was in Beirut on Thursday to show support.
Mr Macron floated a vague initiative to bridge decades of division and reduce corruption, a hallmark of Lebanon’s Second Republic after the end of the civil war in 1990.
A man told him in the Christian Gemayzeh district of East Beirut that the Lebanese “don't want the money to go to our government".
"You can trust me so that the help comes to you directly," Mr Macron replied.
He has taken special interest in Lebanon beyond France’s traditionally close ties to its former colonial territory.
Mr Macron personally intervened three years ago to mend ties between former Lebanese prime minister Saad Al Hariri and Saudi Arabia.
But two French political sources expected any long-term rescue to rely on reforms that the Hezbollah-aligned government has not enacted.
They referred to comments two weeks ago by French Foreign Minister Jean-Yves Le Drian in Beirut, in which he chided the Lebanese political class for failing to act on sparing the country from financial ruin.
One of the sources said that although Mr Macron sometimes ignores the advice of his Foreign Ministry, “ultimately he cannot appear as rescuing a government beholden to Hezbollah” and deviating from the US stance.
The explosion occurred weeks after talks ended between the government and the International Monetary Fund for an emergency financial package.
The government defaulted in March on its public debt, after bans on dollar deposits were imposed to halt a run on the banks.
A German diplomat said the Lebanese government was succeeding in “employing the disaster politically” and would probably receive a visit to Beirut by a higher-ranking official from Berlin.
He said it was standard procedure in such disasters for the German Development Ministry to divert funds temporarily from existing aid projects in Lebanon towards a “rapid response” to help the country cope.
“Germany may end up financing a special reconstruction project in the aftermath of the disaster but I do not think there will be cash flow transfers to the government,” the diplomat said.
Another European diplomat said the explosion, and the corruption and incompetence behind it, presented EU policymakers with a quandary.
He said the disaster showed the need “to stabilise this corrupt system” while “there is rampant evidence that this system is deeply corrupt and simply not able and willing to reform".
As You Were
Liam Gallagher
(Warner Bros)
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
Match info:
Manchester City 2
Sterling (8'), Walker (52')
Newcastle United 1
Yedlin (30')
Abandon
Sangeeta Bandyopadhyay
Translated by Arunava Sinha
Tilted Axis Press
Ready Player One
Dir: Steven Spielberg
Starring: Tye Sheridan, Olivia Cooke, Ben Mendelsohn, Mark Rylance
How Tesla’s price correction has hit fund managers
Investing in disruptive technology can be a bumpy ride, as investors in Tesla were reminded on Friday, when its stock dropped 7.5 per cent in early trading to $575.
It recovered slightly but still ended the week 15 per cent lower and is down a third from its all-time high of $883 on January 26. The electric car maker’s market cap fell from $834 billion to about $567bn in that time, a drop of an astonishing $267bn, and a blow for those who bought Tesla stock late.
The collapse also hit fund managers that have gone big on Tesla, notably the UK-based Scottish Mortgage Investment Trust and Cathie Wood’s ARK Innovation ETF.
Tesla is the top holding in both funds, making up a hefty 10 per cent of total assets under management. Both funds have fallen by a quarter in the past month.
Matt Weller, global head of market research at GAIN Capital, recently warned that Tesla founder Elon Musk had “flown a bit too close to the sun”, after getting carried away by investing $1.5bn of the company’s money in Bitcoin.
He also predicted Tesla’s sales could struggle as traditional auto manufacturers ramp up electric car production, destroying its first mover advantage.
AJ Bell’s Russ Mould warns that many investors buy tech stocks when earnings forecasts are rising, almost regardless of valuation. “When it works, it really works. But when it goes wrong, elevated valuations leave little or no downside protection.”
A Tesla correction was probably baked in after last year’s astonishing share price surge, and many investors will see this as an opportunity to load up at a reduced price.
Dramatic swings are to be expected when investing in disruptive technology, as Ms Wood at ARK makes clear.
Every week, she sends subscribers a commentary listing “stocks in our strategies that have appreciated or dropped more than 15 per cent in a day” during the week.
Her latest commentary, issued on Friday, showed seven stocks displaying extreme volatility, led by ExOne, a leader in binder jetting 3D printing technology. It jumped 24 per cent, boosted by news that fellow 3D printing specialist Stratasys had beaten fourth-quarter revenues and earnings expectations, seen as good news for the sector.
By contrast, computational drug and material discovery company Schrödinger fell 27 per cent after quarterly and full-year results showed its core software sales and drug development pipeline slowing.
Despite that setback, Ms Wood remains positive, arguing that its “medicinal chemistry platform offers a powerful and unique view into chemical space”.
In her weekly video view, she remains bullish, stating that: “We are on the right side of change, and disruptive innovation is going to deliver exponential growth trajectories for many of our companies, in fact, most of them.”
Ms Wood remains committed to Tesla as she expects global electric car sales to compound at an average annual rate of 82 per cent for the next five years.
She said these are so “enormous that some people find them unbelievable”, and argues that this scepticism, especially among institutional investors, “festers” and creates a great opportunity for ARK.
Only you can decide whether you are a believer or a festering sceptic. If it’s the former, then buckle up.
Dust and sand storms compared
Sand storm
- Particle size: Larger, heavier sand grains
- Visibility: Often dramatic with thick "walls" of sand
- Duration: Short-lived, typically localised
- Travel distance: Limited
- Source: Open desert areas with strong winds
Dust storm
- Particle size: Much finer, lightweight particles
- Visibility: Hazy skies but less intense
- Duration: Can linger for days
- Travel distance: Long-range, up to thousands of kilometres
- Source: Can be carried from distant regions
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