LHV Persian Gulf Fund -rahasto sijoittaa Persianlahden maiden yhteistyöneuvoston (GCC) jäsenvaltioiden pörssiosakkeisiin. Rahasto valittiin parhaaksi Persianlahden alueelle sijoittavaksi rahastoksi vuonna 2012 (Zawya Thomson Reuters).

1. LHV Persian Gulf Fund
Joel Kukemelk
Fund Manager
16.01.2014

2. Fund’s investment region
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LHV Persian Gulf Fund invests in all six of the Gulf
Cooperation Council member states – the United
Arab Emirates, Qatar, Saudi Arabia, Oman, Kuwait
and Bahrain.
GCC countries own 40% of world’s oil reserves and
20% of world’s natural gas reserves. Funds received
from the sale of oil and gas are directed to
investments to restructure and diversify the local
economies.
Breakdown of fund investments as of 31.12.2013:

3. Rapidly transforming region
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Buildout of new industries – logistics, tourism, solar energy,
aviation, chemicals, Islamic and conventional finance etc.
EXPO 2020, FIFA World Cup 2022 – first time ever in the Middle
East.
UAE and Qatar upgraded to Emerging Market Status by MSCI
and S&P Dow Jones.
Most attractive tax framework in the world (report by World Bank
and PwC).
World’s busiest airport by international passenger traffic is as of
2013 Dubai.
Dubai Mall had 65 mln visitors in 2012 – New York City had 52
mln visitors and Los Angeles 41 mln.
Dubai 2013
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4. Fund performance
As of 31.12.2013:
Fund size: €26 319 097
LHV Persian Gulf Fund, A-unit, since launch
Launched: 13.02.2008
Fund Manager: Joel Kukemelk
(since 01.09.2010)
Management fee: 1.75%
Issue fee: 0%
Redemption fee: 0%
Performance fee: no performance fee
Lock-up: no lock-up
Fund type - UCITS IV
22.08.13-09.09.13 Daily trading (except on Fridays)
-11.0% (Syria
T+6 settlement
crisis)
Custodian: Swedbank
13.06.13-26.06.13
11.06.08-03.03.09
-60.0% (global
financial crisis)
13.01.11-03.03.11
-13.0% (Arab Spring)
11.05.11-05.10.11
-10.0% (euro-zone crisis)
Fund’s historical returns as of 31.12.2013:
4
-4.9% (emerging
market sell-off)
04.04.12-28.06.12
-9.9% (Iran oil sanctions,
euro-zone crisis escalation)
Historical returns as of 31.12.2013:
1 year total:
+49.5%
2 years total:
+67.7%
3 years total:
+63.8%
4 years total:
+96.9%
5 years total:
+119.8%

5. Fund performance
Since launching the fund in March 2008 LHV Persian Gulf Fund (€) has outperformed the MSCI GCC ex
Saudi Arabia (net, USD) index by 53 percentage points.
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Note: Comparison index is given in USD because LHV Persian Gulf Fund hedges all of its EUR/USD risk to get the
underlying performance in EUR. Investments are made in local currencies that are pegged to USD.
LHV Persian Gulf Fund (€) vs GCC stock markets (MSCI indices, net, USD)
140%
120%
LHV Persian Gulf Fund
100%
MSCI GCC ex SA
+53%
MSCI Qatar
80%
Tadawul Saudi Arabia
60%
MSCI UAE
40%
MSCI Oman
20%
MSCI Kuwait
5.03.2008
30.04.2008
30.06.2008
31.08.2008
31.10.2008
31.12.2008
28.02.2009
30.04.2009
30.06.2009
31.08.2009
31.10.2009
31.12.2009
28.02.2010
30.04.2010
30.06.2010
31.08.2010
31.10.2010
31.12.2010
28.02.2011
30.04.2011
30.06.2011
31.08.2011
31.10.2011
31.12.2011
29.02.2012
30.04.2012
30.06.2012
31.08.2012
31.10.2012
31.12.2012
28.02.2013
30.04.2013
30.06.2013
31.08.2013
31.10.2013
31.12.2013
0%
Source: MSCI for all GCC country indices except for Saudi Arabia where Tadawul index is used.
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MSCI Bahrain

6. Fund statistics
LHV Persian Gulf Fund performance statistics as of 09.01.2014:
Source: Bloomberg
Dividends are reinvested, 0% taxes on dividends.
Fund’s standard deviation (annualised) in the last:
12 months is 13.1%;
36 months is 13.1%;
60 months is 17.5%.
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MSCI GCC ex SA

7. What kind of union is the GCC?
Gulf Cooperation Council or the GCC:
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Political and economical union between 6 countries.
On aggregate - current account surplus every year since
1998.
Member states’ currencies are pegged to USD.
Created in 1981, aims are somewhat similar to the
European Union.
Joint military presence (Peninsula Shield Force).
Common market since 2008.
Majority of the people in these countries are Sunnis by
religion.
In total 40+ mln people live in the GCC, aggregate GDP is
around $1.5 trillion.
GCC has 10% of MENA population, 50% of MENA (Middle
East and North-Africa) GDP.
Longer-term project is common currency – initially
scheduled for 2010, today’s reality is 2020+.

8. Region
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In total there are over 400 mln people living in the GCC countries and its nearby
region. In addition to that there’s India close by with 1 billion potential consumer.
1.6 billion Muslims in the world.
GCC companies want to offer increasingly more products and services in nearby
countries.
Low correlation with other (emerging) markets. LHV Persian Gulf Fund’s correlation
to MSCI Emerging Markets Index (weekly data, both in EUR) was +0.6 in 2011, +0.4
in 2012 and -0.8 in 2013.
Source: Goldman Sachs, November 2011
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Source: EFG-Hermes, October 2013

9. Significance of energy prices
Brent oil price (USD/barrel) last 10 years:
Source: Bloomberg
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75%-85% of GCC-countries’ budget revenues come from the sale of oil and gas.
The weighted average oil price needed for the GCC-countries to cover the planned
budgetary expenses and investments was $79/barrel in 2012 and $85/barrel in 2013.
For the region it’s important that oil price stays above the before-mentioned levels, oil
price increases are not needed.
LHV Persian Gulf Fund’s correlation with oil price is low (weekly data, both in EUR):
+0.2 in 2011, +0.1 in 2012 and -0.4 in 2013.

10. Strong economic outlook
Purchasing Managers’ Indices (PMI) in the UAE and Saudi Arabia are very strong:
UAE: „New orders
expanded at the fastest
rate in the survey history.
The rate of growth in new
export business also
jumped to a record high.“
Source: HSBC, markit
Source: HSBC, markit
Real non-oil GDP growth forecasts by EFG:
Qatar
UAE
Oman
Saudi Arabia
Kuwait
Bahrain
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2013
+10.1%
+4.7%
+5.1%
+4.5%
+4.2%
+3.2%
2014
+11.0%
+5.4%
+5.3%
+5.1%
+4.6%
+3.5%
Real GDP growth forecasts by EFG:
Qatar
UAE
Oman
Saudi Arabia
Kuwait
Bahrain
2013
+6.3%
+3.4%
+4.9%
+3.0%
+2.3%
+4.2%
2014
+7.8%
+4.3%
+4.1%
+4.5%
+4.0%
+3.1%

11. Fund investments
GCC countries’ stock markets’ total market
capitalisation is around $1.0 trillion or 2% of global
public equity. Over 700 different listed stocks.
GCC countries’ index sizes as of December 2013
(source – Zawya, primary listings):
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Saudi Arabia
Qatar
UAE Abu Dhabi
UAE Dubai
Kuwait
Oman
Bahrain
$475 bln
$160 bln
$115 bln
$110 bln
$105 bln
$25 bln
$20 bln
As of 31.12.2013
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12. Fund investments
Some examples of historical revenues and operating incomes of some of the fund’s
biggest investments.
First Gulf Bank
Qatar Fuel
2500
4000
2000
3000
1500
2000
1000
1000
500
0
0
2005
2006
2007
2008
Net revenue (mln USD)
2009
2010
2011
2012
2004
Operating income (mln USD)
2006
2007
Revenue (mln USD)
Industries Qatar
2008
2009
2010
2011
2012
Operating income (mln USD)
Qatar National Bank
6000
4000
5000
3000
4000
3000
2000
2000
1000
1000
0
0
2005
2006
2007
Revenue (mln USD)
12
2005
2008
2009
2010
2011
Operating income (mln USD)
2012
2006
2007
2008
Net revenue (mln USD)
2009
2010
2011
2012
Operating income (mln USD)

13. Attractive valuation
Fund investments trade at attractive multiples, offer high dividend yield and significant
long-term growth prospects.
Current market valuation multiples and growth figures as of 13.01.14:
Real non-oil GDP growth forecasts by EFG
Bloomberg 2014 estimated P/E
Qatar
Trailing P/B
2013
2014
10.8x
1.8x
+10.1%
+11.0%
+4.7%
+5.4%
UAE
Dubai
14.6x
1.3x
Abu Dhabi
11.1x
1.5x
Oman
11.0x
1.6x
+5.1%
+5.3%
Saudi Arabia
12.8x
2.2x
+4.5%
+5.1%
Kuwait
13.1x
1.3x
+4.2%
+4.6%
Bahrain
8.7x
0.9x
+3.2%
+3.5%
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14. Summary of 2013
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United Arab Emirates and Qatar were finally upgraded to Emerging Markets.
Dubai’s airport reached the status of world’s busiest airport measured by
international passenger traffic eclipsing London’s Heathrow’s pole position.
Saudi Arabia changed its weekend from Thursday/Friday to Friday/Saturday to be
in-line with the rest of the region, big step forward towards opening up its stock
market to foreign investors.
Iran got a new president and it seems that positive change is in the air when it
comes to relations between Iran and the western world, the nearby GCC countries
will certainly benefit from this theme going forward
GCC countries’ tax frameworks were recognised as the most attractive in the
world by World Bank and PwC
UAE’s Dubai won the right to host EXPO 2020.
Dubai’s New Year Eve’s fireworks display set new Guinness record.
Escalation of Syrian conflict was avoided.

15. Summary of 2013
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We started the year with 32 investments and ended it with 35 different positions.
In 2013 we made our first investments in Bahrain and now hold positions in all 6
GCC countries.
During the year we managed to hold our maximum 5-star Morningstar rating in the
last 3-year period and in April 2013 we were awarded the prestigious title of
“Best Equity GCC Fund of 2012” by Zawya Thomson Reuters.
In 2013 LHV Persian Gulf Fund units rose +49.5% in value.

16. Returns vs Risk - 2013
LHV Persian Gulf Fund (green) vs all other funds (blue) in the „Middle East & North Africa“
Citywire Global universe.
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Net performance, all funds calculated in USD.
Source: Citywire Global
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17. Future catalysts
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United Arab Emirates and Qatar upgraded to MSCI Emerging Markets Index
– Announced by MSCI in June 2013, implemented as of June 2nd, 2014.
– Announced by S&P Dow Jones in October 2013, implemented as of September 2014.
Large investments being made to diversify domestic economies
– Dubai has recovered from 2008 real estate crisis, construction work has picked up
significant pace again. Abu Dhabi has re-launched its investment projects. Dubai is
hosting EXPO 2020 – first time ever in the Middle East.
– In Qatar, in 2H13 and 1H14, launch of massive works for football World Cup 2022 – first
time ever in the Middle East.
– There are currently $1.4 trillion worth of projects (in various stages till 2025) in the UAE,
$1.0 trillion in Saudi Arabia, $0.4 trillion in Qatar, $0.3 trillion in Kuwait, $0.2 trillion in
Oman and $0.1 trillion in Bahrain (Zawya). In total that’s over 200% of region’s GDP.
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18. Future catalysts
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Saudi Arabia potentially opening its stock
market to foreign investors
– Weekend was changed from
Thursday/Friday to Friday/Saturday at the
end of June 2013.
– In 2013 new chairman of the Capital
Markets Authority was appointed.
– Allowing direct investments by foreigners
would likely mean a quick upgrade to
MSCI Emerging Markets Index.
GCC sovereign investment funds make up
50%-200% of their country’s GDP
– GCC countries’ sovereign wealth funds’
aggregate size is around $2.0 trillion
according to SWF Institute. Global SWF
total size is $6.0 trillion.
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19. Fund Manager
Joel Kukemelk is the fund manager of LHV Persian Gulf Fund
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Joel has been working in LHV Bank since 2006 and in LHV Asset Management since 2010. In 2008 he
graduated from the University of Tartu with a Bachelor’s degree (cum laude) in Economics and in 2010 he
graduated from the same university with a Master’s degree (cum laude) in Economics, specialising in
finance and accounting. In December 2009 Joel passed his CFA Level I exam and in June 2011 he also
successfully passed his CFA Level II exam.
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LHV Asset Management (AS LHV Varahaldus) is a fund management company supervised by the Financial
Supervision Authority of Estonia. LHV Asset Management is owned by AS LHV Group, which is a holding
company for LHV Asset Management as well as LHV Bank. LHV was founded in 1999 and offers its services
in Estonia, Latvia, Lithuania and Finland. LHV Persian Gulf Fund is also publicly offered in Sweden, Finland
and Norway. LHV Asset Management also manages mandatory (20% market share in Estonia) and
supplementary pension funds in Estonia. Management board: Mihkel Oja and Kerli Lõhmus.
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In April 2013 LHV Persian Gulf Fund was awarded the title of
„Best Equity GCC Fund Of 2012“ by Zawya Thomson Reuters.
In January 2014 Citywire rated fund manager Joel Kukemelk
with the maximum Citywire AAA rating.

20. Thank You!
Joel Kukemelk
Fund Manager of LHV Persian Gulf Fund
joel.kukemelk@lhv.ee
www.persiangulffund.com
Materials in this seminar must not be taken as investment recommendation, investment advice or as an invitation to
invest in the aforementioned shares. When buying financial services always go through the conditions of the service
and consult your financial adviser.
When investing into the funds go through the fund’s prospectus and the simplified prospectus and look for additional
information from www.lhv.ee and www.persiangulffund.com
Prior results of the investment fund do not constitute a promise or an indication of the future performance of the fund.