10 July Daily market report
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  • 1. Page 1 of 8 QE Intra-Day Movement Qatar Commentary The QE index rose 1.6% to close at 12,919.6. Gains were led by the Banking & Financial Services and Real Estate indices, up 2.4% and 2.2%, respectively. Top gainers were Masraf Al Rayan and Qatar Islamic Bank, rising 4.4% and 4.0%, respectively. Among the top losers, Salam International Investment Co. fell 2.6%, while Qatar German Co. for Medical Devices declined 1.4%. GCC Commentary Saudi Arabia: The TASI index rose 0.2% to close at 9,803.3. Gains were led by the Multi-Investment and Retail indices, rising 2.8% and 1.3%, respectively. Saudi Arabia Refineries gained 5.2%, while Umm Al-Qura Cement rose 4.8%. Dubai: The DFM index gained 1.5% to close at 4,575.1. The Services index gained 7.9%, while the Real Estate & Construction index rose 2.5%. National Central Cooling surged 7.9%, while Commercial Bank of Dubai was up 4.2%. Abu Dhabi: The ADX benchmark index rose 0.6% to close at 4,847.1. The Inv. & Fin. Ser. index gained 3.5%, while the Industrial index was up 1.3%. Al Buhaira National Ins. surged 14.9%, while RAK National Ins. gained 8.5%. Kuwait: The KSE index gained 0.3% to close at 7,076.0. The Banking and Oil & Gas indices rose 0.7% each. United Real Estate Co. gained 10.0%, while Al- Deera Holding Co. was up 8.6%. Oman: The MSM index rose 0.5% to close at 7,190.0. Gains were led by the Financial and Services indices, rising 0.6% and 0.2%, respectively. Construction Materials Ind. gained 2.0%, while Nawras was up 1.9%. Bahrain: The BHB index gained marginally to close at 1,441.1. The Industrial index rose 0.4%, while the Services index was up 0.2%. BMMI gained 3.1%, while Arab Banking Corporation was up 0.7%. Qatar Exchange Top Gainers Close* 1D% Vol. ‘000 YTD% Masraf Al Rayan 55.10 4.4 3,312.4 76.0 Qatar Islamic Bank 101.00 4.0 496.4 46.4 Al Khaleej Takaful Group 44.45 3.4 33.7 58.3 Widam Food Co. 56.00 3.1 58.0 8.3 Commercial Bank of Qatar 68.40 2.9 424.2 15.9 Qatar Exchange Top Vol. Trades Close* 1D% Vol. ‘000 YTD% Masraf Al Rayan 55.10 4.4 3,312.4 76.0 Vodafone Qatar 19.30 2.8 2,427.3 80.2 Ezdan Holding Group 23.60 (0.4) 1,252.3 38.8 Barwa Real Estate Co. 41.50 2.9 1,139.4 39.3 Salam International Investment Co. 18.80 (2.6) 1,030.1 44.5 Market Indicators 10 Jul 14 09 Jul 14 %Chg. Value Traded (QR mn) 725.8 641.0 13.2 Exch. Market Cap. (QR mn) 701,389.8 694,196.6 1.0 Volume (mn) 16.8 17.8 (5.5) Number of Transactions 7,911 7,154 10.6 Companies Traded 42 43 (2.3) Market Breadth 28:12 26:15 – Market Indices Close 1D% WTD% YTD% TTM P/E Total Return 19,269.51 1.6 4.4 29.9 N/A All Share Index 3,266.47 1.4 3.8 26.2 15.6 Banks 3,144.57 2.4 4.1 28.7 15.6 Industrials 4,320.33 0.3 2.9 23.4 16.8 Transportation 2,236.80 1.4 2.6 20.4 14.4 Real Estate 2,735.58 2.2 5.3 40.1 13.7 Insurance 3,559.22 (0.5) 3.9 52.4 9.3 Telecoms 1,651.27 0.9 6.7 13.6 22.8 Consumer 6,858.54 0.7 2.0 15.3 27.0 Al Rayan Islamic Index 4,327.28 1.9 5.3 42.5 18.7 GCC Top Gainers## Exchange Close# 1D% Vol. ‘000 YTD% United Real Estate Co. Kuwait 0.11 10.0 127.5 (6.8) NBQ Abu Dhabi 3.80 5.6 100.0 15.2 Kingdom Holding Co. Saudi Arabia 25.14 4.7 1,364.9 2.6 Masraf Al Rayan Qatar 55.10 4.4 3,312.4 76.0 Com. Bank Of Dubai Dubai 6.25 4.2 5.0 45.0 GCC Top Losers## Exchange Close# 1D% Vol. ‘000 YTD% United Arab Bank Abu Dhabi 6.30 (10.0) 0.1 12.3 IFA Hotels & Resorts Kuwait 0.19 (5.1) 15.0 (34.0) Ajman Bank Dubai 2.77 (3.8) 173.0 11.7 Albaraka Banking Gr. Bahrain 0.82 (2.4) 10.0 15.6 Abu Dhabi Com. Bank Abu Dhabi 7.90 (2.4) 2357.4 21.5 Source: Bloomberg ( # in Local Currency) ( ## GCC Top gainers/losers derived from the Bloomberg GCC 200 Index comprising of the top 200 regional equities based on market capitalization and liquidity) Qatar Exchange Top Losers Close* 1D% Vol. ‘000 YTD% Salam International Investment Co 18.80 (2.6) 1,030.1 44.5 Qatar German Co. for Med. Dev. 14.35 (1.4) 225.7 3.6 Qatar Oman Investment Co. 15.21 (1.2) 374.3 21.5 Qatar Insurance Co. 84.50 (1.2) 183.5 58.8 Qatari Investors Group 56.00 (0.9) 73.7 28.1 Qatar Exchange Top Val. Trades Close* 1D% Val. ‘000 YTD% Masraf Al Rayan 55.10 4.4 179,821.1 76.0 Qatar Islamic Bank 101.00 4.0 49,682.6 46.4 Barwa Real Estate Co. 41.50 2.9 46,731.5 39.3 Vodafone Qatar 19.30 2.8 46,083.6 80.2 Gulf International Services 102.50 1.2 42,203.2 110.0 Source: Bloomberg (* in QR) Regional Indices Close 1D% WTD% MTD% YTD% Exch. Val. Traded ($ mn) Exchange Mkt. Cap. ($ mn) P/E** P/B** Dividend Yield Qatar* 12,919.63 1.6 4.4 12.5 24.5 199.38 192,671.8 16.1 2.2 3.9 Dubai 4,575.09 1.5 4.0 16.0 35.8 325.19 89,260.5 24.6 1.8 2.3 Abu Dhabi 4,847.14 0.6 1.6 6.5 13.0 87.16 135,124.7 14.3 1.8 3.4 Saudi Arabia 9,803.29 0.2 1.2 3.1 14.9 1,656.90 534,976.9 19.4 2.4 2.9 Kuwait 7,076.00 0.3 1.0 1.5 (6.3) 67.63 111,370.0 16.8 1.1 3.9 Oman 7,189.97 0.5 1.9 2.6 5.2 19.67 26,474.1 12.5 1.7 3.9 Bahrain 1,441.14 0.0 1.0 0.9 15.4 2.18 53,720.6 11.3 1.0 4.8 Source: Bloomberg, Qatar Exchange, Tadawul, Muscat Securities Exchange, Dubai Financial Market and Zawya (** TTM; * Value traded ($ mn) do not include special trades, if any) 12,600 12,700 12,800 12,900 13,000 9:30 10:00 10:30 11:00 11:30 12:00 12:30 13:00
  • 2. Page 2 of 8 Qatar Market Commentary  The QE index rose 1.6% to close at 12,919.6. The Banking & Financial Services and Real Estate indices led the gains. The index rose on the back of buying support from non-Qatari shareholders despite selling pressure from Qatari shareholders.  Masraf Al Rayan and Qatar Islamic Bank were the top gainers, rising 4.4% and 4.0%, respectively. Among the top losers, Salam International Investment Co. fell 2.6%, while Qatar German Co for Medical Devices declined 1.4%.  Volume of shares traded on Thursday fell by 5.5% to 16.8mn from 17.8mn on Wednesday. Further, as compared to the 30-day moving average of 17.7mn, volume for the day was 4.8% lower. Masraf Al Rayan and Vodafone Qatar were the most active stocks, contributing 19.7% and 14.4% to the total volume respectively. Source: Qatar Exchange (* as a % of traded value) Ratings, Earnings and Global Economic Data Ratings Updates Company Agency Market Type* Old Rating New Rating Rating Change Outlook Outlook Change United Arab Bank (UAB)* CI Abu Dhabi FSR/LT FCR/ST FCR/SR BBB/BBB+/A2/ 3 BBB+/BBB+/ A2/3  Stable Kuwait Energy Co. (KEC) Fitch Kuwait LT IDR/ Senior Unsecured Rating – B-/B-(EXP) – Stable – Source: News reports (* LT – Long Term, ST – Short Term, FSR- Financial Strength Rating, FCR – Foreign Currency Rating, LCR – Local Currency Rating, IDR – Issuer Default Rating, SR – Support Rating, LC – Local Currency)(* Outlook for FSR has been reverted from Positive to Stable while the Outlook for FCR remains Stable) Earnings Releases Company Market Currency Revenue (mn)2Q2014 % Change YoY Operating Profit (mn) 2Q2014 % Change YoY Net Profit (mn) 2Q2014 % Change YoY Taiba Holding Co. Saudi SR – – 47.8 -0.6% 59.2 -6.9% Al-Jouf Agriculture Development Co. Saudi SR – – 23.2 1.6% 27.8 20.3% United Wire Factories Co. Saudi SR – – 29.7 -10.8% 30.0 -11.2% Tourism Enterprise Co. Saudi SR – – 1.8 3.6% 1.6 6.4% Yanbu Cement Co. Saudi SR – – 229.0 -19.9% 241.0 -12.0% Taiba Holding Co. Saudi SR – – 47.8 -0.6% 59.2 -6.9% Source: Company data, DFM, ADX, MSM Global Economic Data Date Market Source Indicator Period Actual Consensus Previous 07/10 US Department of Labor Initial Jobless Claims 5 July 304K 315K 315K 07/10 US Bloomberg Bloomberg Consumer Comfort 6 July 37.6 – 36.4 07/11 US US Treasury Monthly Budget Statement June $70.5B $76.5B $116.5B 07/10 France INSEE Industrial Production MoM May -1.70% 0.20% 0.30% 07/10 France INSEE Industrial Production YoY May -3.70% -1.00% -2.40% 07/10 France INSEE Manufacturing Production MoM May -2.30% 0.00% 0.00% 07/10 France INSEE Manufacturing Production YoY May -3.00% 0.80% -0.70% 07/10 France INSEE CPI EU Harmonized YoY June 0.60% 0.80% 0.80% 07/10 France INSEE CPI YoY June 0.50% 0.70% 0.70% 07/11 France Banque De France Current Account Balance May -3.1B – -2.3B 07/11 Germany Destatis CPI MoM June 0.30% 0.30% 0.30% 07/11 Germany Destatis CPI YoY June 1.00% 1.00% 1.00% 07/10 UK ONS Visible Trade Balance GBP/Mn May -£9204 -£8750 -£8812 07/10 UK ONS Trade Balance Non EU GBP/Mn May -£3961 -£3500 -£3876 07/10 UK ONS Trade Balance May -£2418 -£1600 -£2052 07/10 UK Bank of England Bank of England Bank Rate 10 July 0.50% 0.50% 0.50% 07/11 Spain INE CPI YoY June 0.10% 0.10% 0.10% 07/10 Italy ISTAT Industrial Production MoM May -1.20% 0.20% 0.50% 07/10 China NBS Exports YoY June 7.20% 10.40% 7.00% 07/10 China NBS Imports YoY June 5.50% 6.00% -1.60% 07/10 Japan Bank of Japan PPI MoM June 0.20% 0.10% 0.30% 07/10 Japan Bank of Japan PPI YoY June 4.60% 4.50% 4.40% 07/10 Japan METI Tertiary Industry Index MoM May 0.90% 1.70% -5.70% Overall Activity Buy %* Sell %* Net (QR) Qatari 65.17% 68.34% (22,995,349.84) Non-Qatari 34.83% 31.66% 22,995,349.84
  • 3. Page 3 of 8 07/10 Japan ESRI Consumer Confidence Index June 41.1 40.0 39.3 Source: Bloomberg (s.a. = seasonally adjusted; n.s.a. = non-seasonally adjusted; w.d.a. = working day adjusted) News Qatar  QNB Group: Qatar’s energy subsidy spending lower than many GCC, MENA countries – According to QNB Group (QNBK), spending on energy subsidies in Qatar was 3% of the GDP as compared to 10% in Saudi Arabia and 6% in the UAE. QNBK said the global spending on energy subsidies totaled $492bn in 2011, in which the Middle East & North Africa (MENA) countries alone accounted for nearly half of that amount, making the burden of subsidies on public resources quite substantial. While the total spending on energy subsidies in MENA reached 8.6% of GDP in 2011, there was significant variation among the countries of the region. In countries such as Iraq and Egypt, spending on energy subsidies reached 11% of GDP, while it was 3% of GDP in Tunisia. QNBK said that MENA countries could therefore benefit from reforming their subsidy systems for a number of reasons. First, large spending on subsidies consumes a huge portion of public resources, rendering them unsustainable even in the short-run for some countries. Furthermore, for energy-importing countries, subsidies tend to create external imbalances. Second, subsidies could also hamper economic growth as the government directs its resources away from growth-enhancing spending toward paying subsidy costs. Third, empirical evidence suggests that the benefits of energy subsidies tend to be skewed towards high- income sectors of the population, with the richest 20% of the population in developing countries estimated to receive six times more in fuel subsidies than the poorest 20%. Finally, there are other distortions created by subsidies beyond the direct economic consequences. Subsidies keep fuel prices artificially below the price determined by market forces, which leads to an overconsumption of energy with adverse impact on the environment, health and traffic congestion. (Gulf-Times.com)  GCC-Stat: Inflation in Qatar highest in GCC – The Statistical Centre for the Cooperation Council for the Arab Countries of the Gulf (GCC-Stat) stated that the inflation rate in Qatar is the highest among the GCC countries. The latest inflation figures from the region for the 12-month period through May 2014 reveal that Qatar topped the list with 3.4%. Kuwait had the second-highest inflation rate at 2.9%, followed by Saudi Arabia (2.7%), the UAE (2.1%), Bahrain (1.9%), and Oman (1.5%). When compared to April 2014 figures, inflation rates witnessed 0.5% increase in Qatar, 0.2% in the UAE, Oman and Kuwait, while a 0.1% increase was registered in Saudi Arabia. Meanwhile, inflation figures in Bahrain for May 2014 remained stable. As for price growth within groups of the general consumer price index in each GCC member, housing & energy costs increased in Qatar by 7% over the 12-month period through May 2014. Furniture & household goods rose by 4.7%, 5.2% and 7.4% in the UAE, Kuwait and Oman, respectively. Meanwhile, tobacco prices in Saudi Arabia grew by 6.4%. (Peninsula Qatar)  MEC to launch Qatar’s CSR index – The Ministry of Economy & Commerce (MEC) intends to launch a Qatari Corporate Social Responsibility (CSR) index that takes into account similar international experiments based on relevant UN standards. According to the Qatar CSR Report 2013, the ministry also seeks to form a CSR network covering all Qatari companies in general and companies registered in the Qatari stock exchange in particular, in order to promote the exchange of ideas and help these companies meet CSR standards. The Qatar CSR network launched the Qatar CSR Report 2013 in partnership with Qatar University and the MEC. The ministry has formed a team to suggest CSR standards for Qatari companies, which includes a number of organizations and ministries. (Gulf-Times.com)  High rental income pushes up demand for real estate – Demand for real estate across the country is on an upswing since an increasing number of investors and developers are attracted to the sector inspired by high rental income. According to real estate company, Roots, rental income from real estate has been giving more returns than bank deposits. Roots’ Managing Director Ahmed Al Oroqui disclosed that this partly explains why real estate transactions in 1H2014 soared to a record QR24.41bn. Al Oroqui said that the growth in the value of transactions in 1H2014 was a high of 18.44% over the same period of 2013. (Zawya)  JBOG project to recover 0.6mn tons of LNG per year, underlines QP’s environmental commitment – Qatar Petroleum (QP) has embarked on several important initiatives such as the Jetty Boil-off Gas Recovery (JBOG) Project in order to meet the world’s growing energy demand as well as to minimize wasted energy. This energy-saving environmental project is led by Qatargas with an aim to recover gas currently being flared during LNG ship loading at Ras Laffan Port. HE Minister of Energy & Industry Dr. Mohammed bin Saleh Al-Sada said that with a capital outlay of $800mn, the JBOG project is set to become a landmark project for the State of Qatar, underlining its strong commitment for protecting the environment. Dr. Al-Sada added that huge investment in JBOG by QP and its partners will reduce the carbon footprint of the 77 million metric tons per annum of LNG production facilities to the minimum. The compressed gas obtained from the JBOG project is planned to be utilized by existing LNG assets of organizations like Qatargas and RasGas either as feedstock to LNG trains or as fuel gas. The project, when fully operational, will recover the equivalent of about 0.6mn tons of LNG per year, which is sufficient natural gas to power more than 300,000 homes. This utilization of the flared gas will result in a saving of approximately 1tn cubic feet of gas over a period of 30 years. (Bloomberg)  Ahlibank to prioritize on SMEs – Ahlibank’s CEO Salah Murad said that the rebranded bank will consider small & medium enterprises (SMEs) as its top priority, and will launch many tailor-made products for them. He said the bank wants to be more active in the SME segment, since it is part of its strategy for 2015. Ahlibank, along with its partners, will soon launch a range of products that suit its growing customer base. (Gulf- Times.com)  QA to have strong presence at Farnborough Air Show – Qatar Airways (QA) is preparing to have a strong presence at the 2014 Farnborough Air Show, scheduled to take place in England, where it will fly its A350 aircraft with QA livery for the first time at a flying display in a European Air Show. The A350, for which QA is the global launch customer, will make its debut alongside two other major aircraft in the fleet. At Farnborough, QA will have on display an Airbus A350, an A320 and a Boeing 787 Dreamliner. The A350 will feature in the flying display, while the latter two will be on static display. QA has ordered 80 of these aircraft to date, leaning toward the larger A350-900 and A350-1000 models, which are scheduled to enter into commercial service in 4Q2014. (Gulf-Times.com)
  • 4. Page 4 of 8  MPHC to announce results on July 27 – Mesaieed Petrochemical Holding Company (MPHC) will disclose its financial reports for the period ending June 30, 2014, on July 27, 2014. (QE) International  US budget surplus falls to $71bn in June; Fed presidents differ on timetable for raising interest rate – According to data released by the Treasury Department, the US budget surplus stood at $71bn at the end of June 2014, down 39% from $117bn in June 2013. Analysts polled by Reuters had expected a surplus of $80bn last month. The YTD deficit at the end of June was $366bn, the lowest since June 2008, as compared to a deficit of $510bn in June 2013. Receipts for the month totaled $324bn, up 13% from a year ago, bringing the YTD total receipts to $2.26tn. Outlays last month were at $253bn, up 49% from last year, for a total of $2.62tn YTD. Meanwhile, the Federal Reserve presidents disagreed on whether a decline in the US unemployment rate to the lowest level in six years warrants advancing the timing for an interest-rate increase. Philadelphia Fed President Charles Plosser said the Fed risks losing credibility by waiting too long to raise rates, while the economic data is already suggesting a need to tighten policy. Plosser said “we are closer than a lot of people might think to the first interest-rate increase since 2006. If the Fed waits too long, we’ll lose credibility. We may lose control of inflation.” However, Chicago’s Charles Evans and Atlanta’s Dennis Lockhart countered that low inflation and labor-market slack force the central bank to wait until the second half of 2015 or 2016. Fed officials are approaching their goals for full employment and price stability faster than they had forecast, sharpening the debate over the timing of a rate increase. St. Louis Fed President James Bullard warned this week that inflation will rise above the Fed’s target late next year. (Reuters, Bloomberg)  Merkel warns of Eurozone fragility, citing Portugal turmoil – German Chancellor Angela Merkel said the turmoil in global markets caused by a Portuguese bank underscores the Eurozone’s fragility and shows the need for governments to respect debt and deficit limits. Merkel’s warning was a renewed message to France and Italy to refrain from softening Eurozone rules as she revived rhetoric reminiscent of the peak of Europe’s debt crisis. “While policy makers put many rules in place to prevent a repeat of the crisis, if we now move away from those rules, for instance on the Stability and Growth Pact, on everything we’ve done to stabilize the Euro, we could very quickly get into a situation where we start foundering,” Merkel said. Banco Espirito Santo SA, Portugal’s second-biggest bank by market value, roiled global markets on July 10 after a parent company missed payments on commercial paper. European stocks and Portuguese bonds rebounded yesterday after a selloff, while the bank’s long-term credit rating was lowered to B+ from BB- by Standard & Poor’s. Banco Espirito Santo SA sought to reassure investors by revealing its exposure to related companies after a missed payment on short-term debt by a group member. The bank said it had €1.18bn of loans, securities and other items linked to Grupo Espirito Santo as of June 30. The lender also said that it has a buffer of €2.1bn above the regulatory minimum, following a capital increase in June. The bank provided this update after a parent company Espirito Santo International missed payments on commercial paper. (Bloomberg)  Weidmann: ECB interest rates too low for Germany – Bundesbank chief Jens Weidmann said the European Central Bank (ECB) should tighten policy as soon as it can and its interest rates are too low for Germany, pointing to tensions in the united front the bank has presented since a major policy shift in June. Weidmann noted that many savers in Germany were irritated by low interest rates but said these were aimed at supporting investment and consumption. The ECB cut interest rates to record lows last month as part of a package of measures to breathe life into a sluggish Eurozone economy, where inflation is running far below the central bank's target and there is a dearth of credit to smaller firms. The ECB president, Mario Draghi said that the bank's Governing Council - of which Weidmann is a member - was unanimous in its commitment to also using unconventional instruments within its mandate, should it become necessary. Weidmann said the German economy, Europe's largest, has been outperforming other countries in the bloc, however if the Bundesbank were autonomous, Germany would benefit from a tighter rather than a looser monetary policy. (Reuters)  Oil demand rising fastest since 2010 for IEA on China – The International Energy Agency (IEA) said Global oil demand will rise at the fastest pace in five years in 2015 as China leads gains in emerging economies. In its first monthly report to assess 2015, IEA said that world oil consumption will increase next year by 1.4mn bpd. The rate of growth will be the fastest since 2010. IEA further added that, it is also higher than a projected increase of 1.2mn a day in supplies from outside the OPEC. Demand growth will be led by China and other countries outside the 34-member Organization of Economic Cooperation and Development. IEA said while oil has retreated in the past month as threats to supplies in Libya and Iraq abate, prices will stay supported near historically high levels as risks in the region “remain extraordinarily high”. Brent crude futures slipped 2.3% this year as Libya aims to restore supplies curbed by political protests, concerns fade that Iraq’s output will be reduced by an Islamist insurgency, and production in the US nears its highest in three decades. According to the IMF, Global GDP will expand by 3.9% next year, up from 3.6% in 2014. (Bloomberg)  China money rate rises in week after reserves payment by banks – China’s benchmark money-market rate climbed this week as banks set aside funds to meet higher reserve requirements following an increase in deposits. According to a weighted average compiled by the National Interbank Funding Center the seven-day repurchase rate, a gauge of interbank funding availability, climbed 34 basis points, to 3.77%. Data compiled by Bloomberg shows the People’s Bank of China added a net 50bn Yuan to the financial system via money- market operations in the last four days, a ninth straight week of injections. The cost of one-year interest-rate swaps, the fixed payment needed to receive the floating seven-day repo rate, was steady this week at 3.74%. Consumer prices in China climbed 2.3% in June from a year earlier, less than the median estimate of 2.4% in a Bloomberg News survey. Customs data showed exports climbed 7.2% last month and imports rose 5.5%, both gaining less than economists forecast. (Bloomberg)  S&P raises Ukraine's outlook as IMF bailout boosts economy – Standard & Poor's revised its outlook on Ukraine to Stable from Negative, stating that the International Monetary Fund program adopted in April 2014 has helped improve the economic situation in the country. However, the agency noted that the IMF program could be impacted by geopolitical risks and a severe recession. S&P said full disbursement of the IMF program and related multilateral lending should enable Ukraine to meet its external financing needs over the next year. Ukraine said it remained confident of receiving further aid under the bailout program and appealed to Western institutions and donors for further cash and credit. S&P also said the new government under Prime Minister Arseny Yatseniuk had been stable and relatively cohesive. Earlier in April, the IMF's board
  • 5. Page 5 of 8 had signed on a $17bn two-year aid program for Ukraine to help the former Soviet republic's economy to recover after months of upheaval. The ratings agency said that it did not expect the geopolitical environment to stabilize in the short-term. S&P affirmed Ukraine’s 'CCC' long-term foreign currency sovereign credit ratings. (Reuters) Regional  OPEC's oil market share to shrink in 2015 despite growing demand – The OPEC expects its share of the world oil market to shrink in 2015 for a third year running, due to the US shale oil boom, giving the exporter group little comfort from an acceleration in global demand. Making its first 2015 forecast in a monthly report, the OPEC said that demand for its oil in 2015 would average 29.37mn bpd, down 310,000 bpd from 2014. The report by OPEC points to ample supplies in 2015, especially if there is further progress in resolving outages among OPEC countries Libya, Iraq and Iran. Those production problems have curbed supply in 2015 and helped support prices above $100 a barrel. The report is also a further illustration that technology for extracting oil & gas from shale is reducing dependence on OPEC. OPEC also forecast a recovery in demand next year as economic growth gathers pace, predicting that global oil usage will expand by 1.21mn bpd, up from 2014's 1.13mn bpd increase. However, non-OPEC supply, the source of two in every three barrels, is expected to increase next year by 1.31mn bpd, more than demand, with the US leading the way. OPEC expects the US production to average at 13.12mn bpd in 2015, up 880,000 bpd from 2014, which is the highest increase among all non-OPEC countries. Still, it warned that a drop in oil prices could dampen the expansion. (Reuters)  CDSI: Saudi imports, non-oil exports fall 5% – According to data by the Central Department of Statistics & Information (CDSI), non-oil commodity exports from Saudi Arabia dropped 5.1%, their first fall since March 2013, while the value of the country’s import fell an annual 5% in May 2014. Non-oil exports account for around 12% of overall exports of Saudi. Earlier, Reuters reported that the Kingdom’s current account surplus would come in at 16.6% of GDP in 2014 and 11.9% in 2015. Reuters said that much of the decline was due to lower exports of petrochemicals and plastic, which have together accounted for 65% of total non-oil exports since the start of the year. (GulfBase.com)  KAEC sign deal with 3 new firms to set up plants in Industrial Valley – King Abdullah Economic City (KAEC) has signed contracts with new three manufacturing companies that are investing in the KAEC’s Industrial Valley to take advantage of the opportunities offered by the Saudi market in many industrial sectors. The first company is Paint Innovation Factory, a Saudi-German joint venture for the production of high quality paints, which will establish its plant in the first phase of the industrial valley. The second company is Neem Arabia for Wood Construction, which will construct a facility for the production of decorative woodwork; and the third one Jeddah Aluminum Company Ltd, which will build a factory for the production of windows and doors for residential complexes, towers, commercial buildings and shopping centers. (GulfBase.com)  Revenues of top 100 Saudi companies reach SR679bn in 2013 – According to a financial report, revenues of top 100 Saudi companies registered a marginal growth of 0.51% to touch SR679.41bn by the end of 2013 as compared to SR676.96bn in 2012. Revenues of top 10 companies represented 64.4% of the 100’s total revenues at SR437.1bn. The petrochemical sector was the biggest contributor to the overall revenues at 45.4%, followed by the telecom & IT sector at 11.6%. Meanwhile, real estate development, transport and media & publication sectors were the smallest contributors to the total revenues at 0.9%, 0.6% and 0.4%, respectively. On the other hand, the share of Saudi Basic Industries Corporation (SABIC) to the revenues of top 10 companies was the highest at 43.6% valued at SR190.3bn while its share to the top 100 stood at 28.1%. (GulfBase.com)  JCP records 20% rise in cargo transport – Jubail Commercial Port (JCP) has witnessed 20% increase in the total weight of cargo transported through its port during 1H2014 with 5.075mn tons as compared to 4.24mn tons during 1H2013. The general cargo exports and imports declined by 38% at 579,738 tons in June 2014 as compared to 927,645 tons in 1H2013. The number of containers (TEUs) saw an increase of 26% in 1H2014 when it stood at 190,156 TEUs, as compared to 150,411 TEUs in 1H2013. A total number of 393 ships have docked at JCP during 1H2014 as compared to 322 ships during 1H2013, rising 22%. (GulfBase.com)  Jadwa Investment appoints new CFO – Jadwa Investment has appointed Abdulaziz Al Arifi as the company’s Chief Financial Officer (CFO). Previously Al Arifi was the Treasurer at the National Shipping Company of Saudi Arabia. (Bloomberg)  BSA signs agreement with Reson8 – Broadcast Systems Arabia (BSA) has entered into an exclusive agreement with Italian acoustic engineering firm, Reson8 for the representation, sales and service across the UAE. The agreement will enable UAE-based private and commercial entities to have access to cutting edge acoustic treatment, design and construction facilities for recording studios, practice rooms, broadcasting studios, cinemas, theatres, concert halls, gyms, restaurants, schools, places of worship and home cinemas. (GulfBase.com)  Proposal to build $25bn Renaissance smart city in UAE – Italian developer Stile Italiano Real Estate Industry (Sirei), is collaborating with local partners to construct the proposed new smart city in the UAE, which has been valued at $25-30bn investment. The project is still in its early phases as only the design phase has been completed. The company is yet to find a local partner to start construction work. Titled ‘Renaissance City’, the city will be built over 300 hectares, and will have residences, offices, a school, shopping mall, medical centre, library, and the UAE’s first opera house, among other amenities. (Bloomberg)  Ras Al Khaimah DED signs deal with UAE MoE – The Ras Al Khaimah Department of Economic Development (DED) has signed an agreement with the UAE Ministry of Economy (MoE) to improve the business environment in the UAE and attract investments into the country. The RAK DED has been authorized to issue limited liability, general and limited partnership documents and collect fees on behalf of the MoE for companies operating in the Emirate. The authority has also been mandated to transfer income arising from collection between accounts, in accordance with the instructions of the Ministry of Finance. (Bloomberg)  UAE MoH, Sharjah, Bee’ah sign MoU – The UAE Ministry of Health (MoH) and a Sharjah-based waste management company, Bee’ah, have signed a MoU to recycle materials that are used by the MoH. According to the MoU, the ministry will improve the environment friendly policy and use wastes after their treatment and recycling. (Bloomberg)  ADMA-OPCO awards $2bn UAE offshore deal to Hyundai – Abu Dhabi Marine Operating Company (ADMA-OPCO) has awarded South Korea-based Hyundai Heavy Industries a $2bn project to build offshore oil production facilities in the UAE. The
  • 6. Page 6 of 8 deal is for a project in the Nasr oil field, 130km off Abu Dhabi. With a targeted completion date of 2019, the project will triple the Nasr field’s production to 65,000 barrels per day. (Bloomberg)  UAE CB approves currency notes featuring Braille characters – The UAE Central Bank (UAE CB) has approved a memorandum for re-printing of set quantities of currency notes of AED1,000, AED500, AED200, AED20, AED10 and AED5 denominations using Braille characters, so that they will be readable by the visually impaired. (Bloomberg)  UAE bourses merger plan shelved as terms not agreed – A planned merger of the Dubai Financial Market (DFM) and the Abu Dhabi Securities Exchange (ADX) has been shelved for the foreseeable future, as terms for the politically sensitive move could not be agreed. Having been mooted for a number of years, the merger of the DFM and the ADX seemed to take an important step closer last year when investment banks were hired to advise on a tie-up. The state-backed deal, seen as one of the biggest changes in the country's financial industry in recent years, was expected to energize financial markets in the UAE, making it easier for investors to operate across the markets and attracting more foreign investment. However, despite a number of key impediments being overcome since then, talks have stalled and a deal is now unlikely to happen any time soon. (Reuters)  Tabreed, MIP consortium acquires 30-year DC concession on Al Maryah Island – A consortium comprising the National Central Cooling Company (Tabreed) and Mubadala Infrastructure Partners (MIP) has acquired a 30-year concession to be the exclusive provider of district cooling (DC) services to the developments on the southern part of Al Maryah Island, Abu Dhabi. The transaction, which is valued at approximately AED1.05bn, involves the acquisition of the existing district cooling provider to Al Maryah Island (Al Wajeez Development Company). The 30-year concession represents an installed capacity of up to 80,000 refrigerated tons (RT) for Abu Dhabi’s new Central Business District and luxury lifestyle destination on Al Maryah Island. The acquisition of the Al Maryah Island plant brings the total number of DC plants owned and operated by Tabreed in the GCC to 67, and increases its connected capacity to over 900,000 RT. (DFM)  Dubai moves up to fifth in MasterCard’s GDCI – Dubai has made to the fifth place in the annual MasterCard Global Destination Cities Index (GDCI), which surveyed 132 cities. Dubai has more visitors per resident than anywhere else in the world as the Emirate climbed the rankings of the world’s most visited cities. Dubai jumped two places overall in the index as it expects to receive more tourists than New York and Istanbul in 2014. The country expects to receive 11.95mn international overnight visitors, an increase of 7.5%, according to the survey. (GulfBase.com)  DGCX to relist Indian rupee options contract – The Dubai Gold & Commodities Exchange (DGCX) has announced the re- listing of its Indian rupee options contract, which was temporarily suspended in 2012 to facilitate migration to a new trading infrastructure, will restart trading on July 18, 2014. DGCX’s new advanced trading infrastructure, built in partnership with leading global financial technology provider Cinnober, will support heightened trading in the options contract. (GulfBase.com)  AED35bn invested in Dubai real estate in 1Q2014 – According to the Dubai Land Department (DLD), AED35bn was invested into the Dubai property market during 1Q2014, representing a 57% rise over the same period in 2013. (GulfBase.com)  Dubai-Canada trade up 61% at AED2bn in 1Q2014 – Dubai’s Ports, Customs & Free Zone Corporation (PCFC) has affirmed its commitment to support the economic ties between the UAE and Canada, as reflected by their growing bilateral trade, which surged 53% in 2013 to AED9.2bn as compared to AED6bn in 2012. Dubai’s foreign trade with Canada recorded a 61% growth in 1Q2014 to reach AED2bn, up from AED1.3bn for the same period in 2013. (GulfBase.com)  Axiom Telecom may revive IPO after cancellation – Dubai- based mobile-phone retailer, Axiom Telecom, said that it may revive its plans for an initial public offering (IPO). Earlier in December 2010, the company abandoned its IPO plans to raise at least $100mn due to market conditions. Dubai Holding’s unit Emirates International Telecommunications (EIT) has a 26% stake in Axiom. According to sources, the company had hired Citigroup Inc. in 2013 to find potential buyers for the stake. The company was planning to raise as much as $300mn from the disposal though an agreement was never reached. (Bloomberg)  Eshraq Properties’ BoD proposes AED600mn capital increase – Eshraq Properties’ board of directors (BoD) has proposed a capital increase by issuing new shares worth AED600mn at AED1 par value. This is subject to the approval of the EGM, which will be held on August 17, 2014. In the absence of the quorum on this date, the second EGM will be on August 24, 2014 and in the absence of the quorum on this date the third EGM will be on September 25, 2014 subject to approval from concerned authorities. (ADX)  ADNEC wins two awards at AEO in London – Abu Dhabi National Exhibitions Company (ADNEC) has won two awards at the annual Association of Event Organizers (AEO) awards ceremony held in London. The high profile industry awards recognized ADNEC Group-owned venues – the Abu Dhabi National Exhibition Centre as ‘Most Sustainable Exhibition and Conference Venue’ and ExCeL London as ‘Best Venue of the Year’. (GulfBase.com)  Aldar Properties appoints new CEO – Abu Dhabi-based Aldar Properties has appointed Mohammed Khalifa Al Mubarak as the new Chief Executive Officer (CEO). Al Mubarak had been serving as the Deputy Chief Executive and Chief Portfolio Management Officer of the company since March 2013. (Reuters)  Etihad to launch six new routes in 1H2015 – Etihad Airways said that it will launch six new routes in 1H2015 offering travelers more connection choices. Daily flights will commence to Madrid (Spain), Edinburgh (Scotland), Kolkata (India), and Entebbe (Uganda). It will also operate four flights a week to Hong Kong, and three flights a week to Algiers (Algeria). Additionally, Etihad’s existing daily flights to Brisbane (Australia), currently operated via Singapore, will become a direct service from June 2015. (Bloomberg)  KOC awards $700mn contract to Petrofac – UK-based oilfield services company, Petrofac secured a $700mn contract from Kuwait Oil Company (KOC) for a gathering center (GC29) located north of Kuwait City. The project, which includes engineering, procurement, construction, pre-commissioning and commissioning of GC29, is to be completed over three years. GC29 is one of three gathering centers being constructed to support KOC's plans to increase and maintain oil production over the next five years. (GulfBase.com)  Former Oman Air CEO appointed as COO – Oman Air has appointed Abdulrahaman Al-Busaidy to the newly created post of Chief Operating Officer (COO), effective July 1, 2014.
  • 7. Page 7 of 8 Abdulrahaman was the airline’s Chief Executive Officer (CEO) from 2000 to 2006. (GulfBase.com)  EHC appoints advisors to raise OMR800mn for Lamar project – Electricity Holding Company (EHC), the holding company of Omani Government-owned companies, has appointed Bank Muscat and J.P. Morgan as joint financial advisors and lead arrangers in connection with a debt raising of OMR800mn. The appointment of Bank Muscat and J.P. Morgan as joint financial advisors and lead arrangers is to advise EHC and its subsidiaries and raise long term funding to support Electricity Holding Group's capital expenditure of the distribution and transmission network, and to refinance the existing short terms borrowings. (GulfBase.com)  OGC to invest in new expansion, value-added projects – Oman Gas Company (OGC) has progressed studies on an array of important initiatives that will result in a significant expansion of its countrywide network, as well as contribute to the maximization of the value of the nation’s gas resources. Concept studies have been undertaken in connection with a number of planned ventures, including a major oil pipeline to Ras Markaz where Oman Oil Company intends to build a mammoth 200mn-barrel-capacity crude oil storage park on the Wusta coast. Similar studies have also been initiated with regard to a raft of expansion projects, including a proposed tie-in of DNO Oman export gas to the North Gas Grid, additional gas supply to Salalah Methanol Company, and gas supply to the Carmeuse/Majan plant in Salalah Free Zone. Other ventures planned by OGC have been progressed through to the front end engineering design (FEED) stage. (GulfBase.com)  Oman’s Tenders Board awards tender worth OMR28.45mn – Tender Board, managing and implementing government procurements and projects in Oman has awarded OMR28.45mn worth tenders. The meeting also approved the technical analysis for a number of development and service projects that included the construction of an additional building for the Ministry of Civil Service, the construction of sports complexes in the wilayats of Al Rustaq and Ibra, the implementation of infrastructure for Sumail Industrial Estate and the expansion of Sohar Industrial Area. (GulfBase.com)  NCSI: Budget registers surplus of OMR551mn by May 2014 – According to public finance figures published by the National Centre for Statistics and Information (NCSI), the general state budget by the end of May 2014 registered a surplus figure of OMR551.2mn, against a deficit figure of OMR71.6mn of the same period in 2013. The total surplus figure recorded by the end of May 2014 was OMR582.9mn against a deficit of OMR110.4mn recorded over the same period last year. The public sector revenue grew by 0.5% at the end of May 2014, standing at OMR6.04bn, when compared to the end of May 2013 figure of OMR6.01bn. Over the same period, net oil revenue declined to OMR4.3bn, compared to OMR4.5bn over the same period in 2013, representing a decline of 2.6%. Gas revenue also witnessed a decline to OMR594.3mn, against OMR605.9mn over the same period in 2013, representing a year-on-year fall of 1.9%. Furthermore, total public sector spending registered an increase of 8% by end of May 2014 from OMR4.7bn recorded by end of May 2013 to OMR5.1bn. The main reason of the increase in the public sector spending is attributed to the 12% increase of current expenditure from OMR2.9bn registered by the end of May 2013 to OMR3.2bn during the same period in 2014. (GulfBase.com)  Investcorp to acquire SPGPrints for about $327mn – Investcorp entered into agreement to acquire SPGPrints Group from funds managed by Bencis Capital Partners for an enterprise value of $327mn. SPGPrints is a provider of integrated solutions for rotary screen and digital printing for textiles and graphic applications. The closing the transaction is expected following clearance from relevant competition authorities. (GulfBase.com)  Naseej launches tier three of key project – Bahrain-based real estate company, Naseej has announced the sales launch of tier three of the Al Madina Al Shamaliya (North Bahrain New Town) housing development. It forms part of Bahrain's ground- breaking social and affordable housing public-private- partnership (PPP) between the Housing Ministry and Naseej. Valued at over $450mn and involving the development of 2,800 social and affordable homes for Bahraini citizens at Al Madina Al Shamaliya and Al Luwzi, the PPP is a first for the kingdom, and also the first of its kind in the GCC. (GulfBase.com)  EDB, ICD sign MoU – The Economic Development Board (EDB) and the Islamic Corporation for the Development of the Private Sector (ICD) have signed a MoU to promote the growth of small and medium enterprises (SMEs) in Bahrain. Under the agreement, ICD will establish a world-class Islamic Ijara company in Bahrain to help SMEs succeed by offering Shari’ah- compliant financing products. The proposed Ijara company will also be used as a training centre to help Bahrainis in the area of Islamic finance. Additionally, ICD plans to set up a software development centre in Bahrain to offer solutions for Ijara, takaful, mortgage and Islamic banking, for export to the international market. Moreover, ICD will assess the feasibility of establishing an SME Fund in partnership with the EDB, with the aim of supporting and investing in SMEs based in Bahrain. (GulfBase.com)  Bahrain plans BHD280mn power projects – Bahraini Minister of State for Electricity and Water Affairs, Dr. Abdulhussain Mirza, said that three major power plants costing BHD280mn will be constructed in the country. The planned 400-220kV plants will be built in the Hidd, Umm Al Hassam and Riffa districts of the kingdom. The project will be the first to be financed by Kuwait under the GCC Development Program. (Bloomberg)
  • 8. Contacts Saugata Sarkar Abdullah Amin, CFA Shahan Keushgerian Head of Research Senior Research Analyst Senior Research Analyst Tel: (+974) 4476 6534 Tel: (+974) 4476 6569 Tel: (+974) 4476 6509 saugata.sarkar@qnbfs.com.qa abdullah.amin@qnbfs.com.qa shahan.keushgerian@qnbfs.com.qa Sahbi Kasraoui Ahmed Al-Khoudary QNB Financial Services SPC Manager – HNWI Head of Sales Trading – Institutional Contact Center: (+974) 4476 6666 Tel: (+974) 4476 6544 Tel: (+974) 4476 6548 PO Box 24025 sahbi.alkasraoui@qnbfs.com.qa ahmed.alkhoudary@qnbfs.com.qa Doha, Qatar DISCLAIMER: This publication has been prepared by QNB Financial Services SPC (“QNBFS”) a wholly-owned subsidiary of Qatar National Bank (“QNB”). QNBFS is regulated by the Qatar Financial Markets Authority and the Qatar Exchange; QNB is regulated by the Qatar Central Bank. This publication expresses the views and opinions of QNBFS at a given time only. It is not an offer, promotion or recommendation to buy or sell securities or other investments, nor is it intended to constitute legal, tax, accounting, or financial advice. We therefore strongly advise potential investors to seek independent professional advice before making any investment decision. Although the information in this report has been obtained from sources that QNBFS believes to be reliable, we have not independently verified such information and it may not be accurate or complete. While this publication has been prepared with the utmost degree of care by our analysts, QNBFS does not make any representations or warranties as to the accuracy and completeness of the information it may contain, and declines any liability in that respect. QNBFS reserves the right to amend the views and opinions expressed in this publication at any time. It may also express viewpoints or make investment decisions that differ significantly from, or even contradict, the views and opinions included in this report. COPYRIGHT: No part of this document may be reproduced without the explicit written permission of QNBFS. Page 8 of 8 Rebased Performance Daily Index Performance Source: Bloomberg Source: Bloomberg Source: Bloomberg Source: Bloomberg 80.0 90.0 100.0 110.0 120.0 130.0 140.0 150.0 160.0 170.0 180.0 190.0 200.0 210.0 Jul-10 Jul-11 Jul-12 Jul-13 Jul-14 QE Index S&P Pan Arab S&P GCC 0.2% 1.6% 0.3% 0.0% 0.5% 0.6% 1.5% 0.0% 0.4% 0.8% 1.2% 1.6% 2.0% SaudiArabia Qatar Kuwait Bahrain Oman AbuDhabi Dubai Asset/Currency Performance Close ($) 1D% WTD% YTD% Global Indices Performance Close 1D% WTD% YTD% Gold/Ounce 1,338.62 0.2 1.4 11.0 DJ Industrial 16,943.81 0.2 (0.7) 2.2 Silver/Ounce 21.45 0.2 1.3 10.2 S&P 500 1,967.57 0.1 (0.9) 6.4 Crude Oil (Brent)/Barrel (FM Future) 106.66 (1.8) (3.6) (3.7) NASDAQ 100 4,415.49 0.4 (1.6) 5.7 Natural Gas (Henry Hub)/MMBtu 4.08 (0.7) (4.9) (6.0) STOXX 600 336.91 0.2 (3.2) 2.6 LPG Propane (Arab Gulf)/Ton 103.38 (1.1) (0.5) (18.3) DAX 9,666.34 0.1 (3.4) 1.2 LPG Butane (Arab Gulf)/Ton 123.50 (0.7) (0.4) (9.0) FTSE 100 6,690.17 0.3 (2.6) (0.9) Euro 1.36 (0.0) 0.1 (1.0) CAC 40 4,316.50 0.4 (3.4) 0.5 Yen 101.30 (0.0) (0.7) (3.8) Nikkei 15,164.04 (0.3) (1.8) (6.9) GBP 1.71 (0.1) (0.3) 3.4 MSCI EM 1,058.67 (0.3) (0.4) 5.6 CHF 1.12 0.0 0.2 0.1 SHANGHAI SE Composite 2,046.96 0.4 (0.6) (3.3) AUD 0.94 (0.0) 0.3 5.3 HANG SENG 23,233.45 (0.0) (1.3) (0.3) USD Index 80.19 0.1 (0.1) 0.2 BSE SENSEX 25,024.35 (1.4) (3.6) 18.2 RUB 34.22 0.7 (0.7) 4.1 Bovespa 54,785.93 0.4 1.4 6.4 BRL 0.45 (0.1) (0.4) 6.4 RTS 1,383.18 (0.0) 1.7 (4.1) 185.6 153.2 138.6