TresVista October 09 Newsletter

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The MENA Newsletter gives you a quick but incisive look at the events taking place in the business world in the Middle East. It is classified into sections such as Macro economic news, Government …

The MENA Newsletter gives you a quick but incisive look at the events taking place in the business world in the Middle East. It is classified into sections such as Macro economic news, Government regulations, and Liquidity events amongst others. We aim to give you a broad overview of the factors influencing the MENA markets and an understanding of the newsworthy events across countries, sectors and companies in the region.

Your feedback is appreciated as we are always looking for ways to improve our Newsletter and enhance your experience. You can write to us at newsletter@tresvista.com

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  • 1. Issue No. 2.02 MENA MONTHLY NEWS Month of October 2009 MENA MARKETS For additional 110.0 information or requests Country Index Close % Change or to be added to the Saudi Arabia SASEIDX Index 6,268.6 (0.8%) 105.0 Kuwait KWSEIDX Index 7,347.5 (5.2%) distribution list, please UAE DFMGI Index 2,197.5 0.1% contact… 100.0 Egypt HERMES Index 637.4 0.4% Oman MSM30 Index 6,354.9 (4.2%) newsletter@tresvista.com Jordan JOSMGNFF Index 2,615.9 (1.7%) 95.0 Morocco MOSENEW Index 10,775.8 (0.0%) 90.0 Bahrain BHSEASI Index 1,525.8 (2.3%) 1. MENA Overview Qatar DSM Index 7,135.1 (4.7%) 2. Saudi Arabia 85.0 Tunisia TUSISE Index 4,060.5 (0.8%) 3. Kuwait October- October- October- October- October- Lebanon BLOM Index 1,582.5 7.6% 4. UAE 01 08 15 22 29 Abu Dhabi ADSMI Index 3,023.1 (3.7%) 5. Egypt Saudi Arabia Kuwait U.A.E Egypt 6. Other Countries 7. M&A GLOBAL MARKETS 115.0 Country Index Close % Change 110.0 USA Dow Jones 9,712.7 2.1% 105.0 USA S&P 500 1,036.2 0.6% USA NASDAQ 2,045.1 (0.6%) 100.0 EURO DJ Euro Stoxx 2,743.5 (2.4%) 95.0 London FTSE 100 5,044.6 (0.1%) Japan NIKKEI 225 10,034.7 0.6% Market Buzz… 90.0 China HANG SENG 21,752.9 3.8% 85.0 October- October- October- October- October- 01 08 15 22 29 Dow Jones Industrial S&P 500 NASDAQ Composite DJ Euro Stoxx FT SE 100 Nikkei 225 Hang Seng COMMODITIES / CURRENCIES Commodity Open Close % Change Currency (USD/) Open Close % Change NYMEX Crude 70.82 77.00 8.7% GBP 0.627 0.608 (3.0%) Gold 999.20 1,045.40 4.6% EUR 0.688 0.679 (1.2%) Silver 16.35 16.31 (0.2%) SAR 3.750 3.750 (0.0%) LME Steel 395.00 370.00 (6.3%) KWD 0.287 0.286 (0.3%) MENA Overview ▲ The construction market in Saudi Arabia, Qatar, and the UAE is expected to exhibit the most favorable growth prospects in the near term, according to a Deloitte Middle East report. In the UAE, majority of infrastructure spending will be borne by Abu Dhabi with USD 275.0 billion of projects in the pipeline in the next five years. ▲ The aviation sector in the Middle East will witness an increase in mergers and acquisitions in 2010, according to a new survey by global business research company, Terrapinn. ▲ UAE led the region's retail banking performance with a 34.0% increase in revenues from last year, 25.0% higher than the GCC industry average of 9.0%. ▲ The Middle East banking sector has been remarkably resilient to the global financial crisis and is poised for growth, said Governor of the Dubai International Financial Centre and Vice Chairman of the UAE Central Bank. ▲ Arab Air Carriers are expected to transport more than 105.0 million passengers in 2009 compared with 96.6 million in 2008, according to the Arab Air Carriers Organization. ▼ The growth recorded by Middle East Airlines has not translated into profitability; according to the Chief Executive of International Air Transport Association as the 8.0% growth in passenger demand has been outstripped by a 13.0% increase in capacity. ▼ The amount of syndicated loans issued in the GCC states in the last three years fell by USD 100.0 billion. ▼ In order to speed up implementation of planned rail projects in the GCC, including a USD 20.0 - USD 25.0 billion track linking all six member states, governments are being forced to assume more of the risk and use public funds to finance these …Development and projects. exploration investments valued at more than ▼ Regional real estate professionals have seen their salaries fall by 3.7% in 2009. USD 196.0 billion are - The present value of the oil and gas reserves of the six GCC countries is estimated at USD 18.3 trillion, according to an being undertaken across economic note by the Dubai International Financial Centre Authority (DIFCA). That figure assumes a conservative price of the GCC oil and gas oil at USD 50.0 per barrel and gas at USD 9.0 per million BTU; if oil prices were to average USD 100.0 per barrel and gas sector… USD 15.0, the present value of GCC energy reserves would be USD 37.7 trillion. TresVista Financial Services, Pvt. Ltd. © Page 1
  • 2. Issue No. 2.02 MENA MONTHLY NEWS Month of October 2009 Saudi Arabia Company % Change Sectors % ▼▲ …Gulf economies are 1 Month Index Performance CAGR (0.8%) Top 5 Gainers: 6,600.0 Telecom (0.6%) on the rebound with a 6,550.0 Banking (2.1%) Anaam Holding SFICO 9.9% 4.7% GDP growth forecast of 6,500.0 Cement (3.5%) Al Baha Investment & Development 4.3% 6,450.0 SIICI 4.0% over 4.0% in 2009, SASEIDX Index 6,400.0 Insurance 12.9% Saudi Kayan 3.8% especially at a time 6,350.0 Top 5 Losers: when other economies 6,300.0 UCA 3.6% 6,250.0 SCC 1.7% are still facing 6,200.0 FIPCO 1.5% difficulties due to the 6,150.0 SCCI 1.3% SHB 1.2% aftershocks of the 6,100.0 Oct-01 economic meltdown… Macro Economic News ▲ The Jeddah Chamber of Commerce and Industry, or JCCI, has launched a SAR 12.0 million Jeddah Economic Gateway, the kingdom's largest online economic resource. ▲ Remittances from foreign workers have grown considerably in the first eight months of 2009, a rise of 12.0% over the January - August 2008 period. ▲ Inflation rose to an annual 4.4% in September 2009 from 4.1% in August 2009, according to official data, its first increase in four months which coincided with the fasting month of Ramadan. ▲ UNCTAD's World Investment Report 2009 said that foreign direct investment in Saudi Arabia accounted for USD 38.2 billion in 2008, which translated into growth of USD 13.8 billion or 36.0% in one year. ▼ Saudi Arabia reported a 17.0% decline in non-oil exports in August 2009 to SAR 9.3 billion. Imports also fell 33.0% to SAR 26.8 billion in August 2009, compared with a year earlier. - Saudi Arabia is expected to start producing 450.0 million cubic feet per day of gas from the first phase of the Karan gas project by mid-2011. Sector News ▲ Saudi transport ministry awarded 22 contracts worth SAR 3.3 billion to local firms to construct new roads in the Kingdom. ▲ Saudi Arabia’s estimated annual population growth of 2.5% is expected to push food consumption by 10.9% through 2013. ▲ The output of 12 cement companies operating in the Kingdom grew to 28.2 million tons in the first nine months of 2009, a growth of 9.7% compared with the same period of 2008. ▲ The value of deposits in banks rose 12.4% to SAR 909.2 billion in August 2009, compared to a year earlier. Demand deposits, representing 44.4% of the total deposits, advanced 18.0% to SAR 403.9 billion. ▲ South Korea's KOGAS plans to invest about USD 345.0 million in building a dimethyl ether plant with an annual production capacity of 300,000.0 tons in Jubail. ▲ Saudi Arabia accounted for around 50.0% of the upcoming power projects in the region, estimated to be worth around SAR 607.5 billion (USD 162.0 billion). ▲ Saudi Arabia now provides some 7.0% of the world's supply of basic petrochemicals. According to the WTO, in 2008 these exports were worth USD 14.3 billion. ▲ A statement issued by Saudi Arabia's Ministry of Commerce and Industry announced lifting the export ban on cement products, which lasted for two years. ▼ Profits generated by Saudi commercial banks, including the 11 listed ones, fell 6.2% in the July - August 2009 period, central bank data showed. Excluding branches abroad, Saudi banks made a profit of SAR 5.3 billion (USD 1.4 billion) in the period, according to the Saudi Arabian Monetary Agency. - Saudi Railway Organization prequalified five consortiums to submit bids for the final phase of a 450.0 km railway. Five alliances led by China Railway Construction, Al Rajhi Group, Al Shoula Group, Bin Laden Group, and Al Badr Group will submit their bids within four months. - Saudi Ports Authority and Singapore's Ports Authority plan to embark on a 50-50, 30 year JV to set up a container terminal at the King Abdul Aziz Port in Dammam. Company News ▲ Etihad Etisalat Company has signed a SAR 600.0 million contract with Ericsson for the enhancement of network capacity. ▲ Saudi Basic Industries Corporation the company's subsidiary, Ibn Hayyan Plastic Products Company, has signed a contract with Albemarle Corporation (United States) to establish an organometallics production facility with an annual production capacity of 6,000.0 metric tons of tri-ethyl aluminum, which is expected to start operations in the year 2012. ▲ Saudi Electricity Co., or SEC, signed a SAR 241.0 million (USD 64.3 million) contract with India-based KEC International and Al Sharif Group to build a power transmission line in northern Riyadh. ▲ Savola Group Company expects its turnover from sugar units in Egypt and Saudi Arabia to grow 41.5 % in 2009. ▲ Far East Agriculture Company will invest USD 300.0 million in a large-scale banana plantation in Mindanao, Philippines. ▲ State-owned Saudi Electricity Company plans to spend USD 20.0 billion to add more than 10,000 megawatts (MW) of generation capacity through six independent power producer (IPP) projects. TresVista Financial Services, Pvt. Ltd. © Page 2
  • 3. Issue No. 2.02 MENA MONTHLY NEWS Month of October 2009 ▲ Saudi Arabia is planning to set up an investment bank for the real estate sector with an initial capital of USD 2.9 billion. …The sliding dollar ▲ Mohammad Al Mojil Group signed a SAR 293.3 million (USD 78.2 million) contract with a Spanish engineering company may spur inflation in the Tecnicas Reunidas to build a power plant for Saudi Aramco's oil project in Manifa. Gulf States whose ▲ Almarai Co. completed its SAR 949.5 million (USD 253.5 million) acquisition of Hail Agricultural Development Co, the first currencies are pegged to successful takeover between two Saudi listed firms. the currency, but the ▲ Saudi Aramco awarded a USD 200.0 million contract to the local MS Al-Suwaidi Industrial Services Company to upgrade 14 exchange regime link bulk storage plants. will survive for now, according to analysts… ▲ National Prawn Company plans to invest USD 250.0 million into prawn farming amid surging demand. ▲ Saudi Electricity Company signed an SAR 6.9 billion (USD 1.8 billion) contract with Arabian Bemco Contracting Company and Doosan Heavy Industries & Construction (South Korea) to transform Al Qurayyah's power plant into a combined power facility. ▲ Saudi Arabian Mining Company announced that it will, along with Saline Water Conversion Corporation and Saudi Electricity Company, establish a USD 6.0 billion power and water plant in Ras Al Zour to run an aluminum manufacturing zone. ▲ Savola Group Company plans to acquire Tate & Lyle's 9.7% stake in United Sugar Company (Saudi Arabia) and 3.0% stake in the latter's subsidiary, United Sugar Company of Egypt. ▲ Saudi Aramco and Bahrain’s National Oil and Gas Authority are negotiating to raise the capacity of an oil pipeline between the two countries to 350,000 barrels per day (bpd) from 235,000 bpd at a cost of USD 350.0 million. ▲ Saudi Industrial Property Authority signed a SAR 300.0 million contract with Ebram Real Estate for the development of a residential complex in the Second Industrial City in Riyadh. ▲ Tanmiyat said that it plans to resume its USD 2.2 billion frozen projects in the UAE in 2010. ▲ Middle East Specialized Cables Company signed a MoU to acquire United Transformers Electric Company. ▲ ExxonMobil Corp. and Saudi Basic Industries Corp. are planning to build two plants worth USD 5.0 billion in Saudi Arabia that will produce synthetic rubbers used to make tyres. ▲ General Authority of Civil Aviation granted Jeddah based pilgrimage airline Alwafeer Air a license to operate in the Kingdom. ▲ General Authority of Civil Aviation signed a SAR 498.0 million contract with Austria’s Rosen Bauer Company to replace and develop firefighting and safety equipment at 27 airports across the Kingdom. ▲ Savola Group Co. said its SAR 440.0 million (USD 117.3 million) acquisition of Fawaz Alhokair Group's Geant supermarkets was approved by antitrust regulators. - Dar Al Arkan Real Estate Development Company announced that it will launch the five year SAR 7.5 billion, "The Sun of the Bride" residential project in Jeddah. The company expects construction to start throughout 2010. - Abdul Latif Jameel (ALJ) group has acquired a 65.0% in Toyotasa (Toyota Sabancı Pazarlama) from Sabancı Holding. - Saudi Binladin won a USD 3.7 billion financial district contract to design and construct 30 buildings at King Abdullah Financial District. - Savola Group Company announced that its 90.0% owned subsidiary, Savola Foods Company, has entered a joint venture with Turkey Tarim Kred and Nesma Holding Company to bid for six sugar plants in Turkey. The company will own a 40.0% stake in the venture. - Aramco and France's Total are expected to pay more than USD 12.0 billion to build the Jubail oil refinery. The 400,000 bpd refinery will be commissioned by end 2012 and is expected to come online in March 2013. - Saudi Basic Industries Corporation (SABIC) will set up a SAR 375.0 million Plastic Applications Development Center at Riyadh Techno Valley by 2012. - Saudi International Petrochemical Company (Sipchem) will fully start a new USD 1.8 billion petrochemical plant in November. The plant will consist of an acetyls complex that will produce 450,000 tons of acetic acid, 330,000 tons of vinyl acetate monomer and 345,000 tons of carbon monoxide annually. Liquidity / Capital raising - The Saudi Credit & Saving Bank signed an agreement with Bab Rizq Jameel, an affiliate of Abdul Latif Jameel Community Services Programs, through which the bank will allocate a portfolio of SAR 100.0 million to support and finance existing and new small projects, entrepreneur projects, and productive household projects. - The Capital Market Authority approved Saudi Pharmaceutical Industries and Medical Appliances Corporation’s request to increase its capital through a rights issue offering valued at SAR 295.0 million. - Construction Products Holding Company (CPC) has decided to increase its capital to USD 267.0 million to achieve its future planned business expansion. - The Islamic development Bank is planning to increase its fundraising and resource mobilization under its medium term note program from USD 1.5 billion to USD 5.0 billion. - Foreign assets controlled by SAMA, the Kingdom's central bank, came in at USD 382.4 billion in August 2009, a decrease of 8.1% compared to 2008. TresVista Financial Services, Pvt. Ltd. © Page 3
  • 4. Issue No. 2.02 MENA MONTHLY NEWS Month of October 2009 - Methanol Chemicals Company has signed a SAR 326.0 million (USD 86.9 million) medium term Murabaha contract with a …30.0% of group of local and gulf banks to finance its projects. hydrocarbon projects in - Saudi Arabian Airlines will offer 30.0% of its catering unit through an IPO in nine months as part its latest efforts to privatize. the Gulf countries have The company also announced that it would merge its ground-handling unit with two other handlers within 2 - 3 months. been put on hold or - Fawaz Alhokair Group has borrowed USD 294.0 million in a syndicated loan to construct a shopping mall in the Sixth of cancelled according to a October city. new report by Dubai- based research house - Almarai Co. said its shareholders approved a plan to raise its capital to SAR 1.2 billion (USD 306.3 million) as well as its offer Proleads Global… to acquire Saudi Hail Agricultural Development Co. - Saudi Automotive Services Company announced that it has signed a USD 68.7 million financing deal with Khaleeji Commercial Bank, to supply electrical parts for Qatar General Electricity and Water Corporation. TresVista Financial Services, Pvt. Ltd. © Page 4
  • 5. Issue No. 2.02 MENA MONTHLY NEWS Month of October 2009 Kuwait Company % Change …The GCC Monetary 1 Month Index Performance CAGR (5.2%) Sectors % ▼▲ Top 5 Gainers: Council will be 8,000.0 Insurance (1.5%) Ekttitab Holding 9.6% 7,900.0 Banks (3.6%) QH 8.6% established by the start 7,800.0 Danah 7.8% Food (2.3%) of 2010 in January, 7,700.0 Al Aman 7.6% KWSEIDX Index Service (5.2%) Coast Investment 7.3% according to GCC’s 7,600.0 Real Estate (6.1%) Top 5 Losers: 7,500.0 Secretary General. 7,400.0 Industries (4.2%) Fujairah Cement 9.0% Tamdeen 7.4% Saudi Arabia, Kuwait, 7,300.0 Investment (9.4%) UREC 6.8% 7,200.0 Qatar, and Bahrain are DAMAC Kuwait 5.9% 7,100.0 KFG 5.9% on track to create a new 7,000.0 shared single currency Oct-01 and have done a lot of Macro Economic News work on technical ▲ China's Sinopec has signed a preliminary pact with Kuwait to build a USD 9.0 billion refinery in southern China. convergence criteria… ▼ Kuwait's economy is expected to lag the rebound among its regional peers, according to Credit Suisse, notching a 2.2% growth rate in 2010 after a projected 1.2 % contraction in 2009. - Expatriate population dropped 0.6% to 2.3 million in H1 2009 from 2.4 million at the end of 2008, bringing to an end 19 years of sharp increases. OVERNMENT REGULATIONS ▲ The National Assembly's Interior and Defense committee approved in principle a draft law calling to convert Kuwait into a single electoral constituency. The amendment aims at preserving national unity by eliminating adverse practices that appeared in the implementation of the five constituency system in the past two elections. Sector News ▼ Minister of Oil and of Information stated that the state's decision to go back on earlier announced plans of bringing oil output to 4.0 million barrels per day by 2020 was due to inadequate staff and market conditions. Company News ▲ Global Investment House and its creditors reached an agreement on a five year debt restructuring plan to start 2010. The Company is expected to make its first 10.0% payment to each creditor in 2010, and the remaining will be rescheduled over the remaining four years. ▲ Kuwait Energy Co. plans to invest an additional USD 100.0 million to drill a well in the Ukraine. The Company's initial investment in the natural gas and gas condensates sector totaled USD 100.0 million. ▲ Ahli United Bank Corporate announced that it has signed a USD 120.0 million agreement with The Oil & Gas Holding Company (Nogaholding), for the latter to finance its stake in the new USD 430.0 million Lubricant Base Oil manufacturing plant in the Kingdom of Bahrain. ▼ South Africa based Econet Wireless is disputing Zain's ownership of one of its most important operations, Zain Nigeria, in a row that could derail Zain's divestment plans. ▼ India's state-run telecom company Bharat Sanchar Nigam Ltd. has sought a reduction in the current offer price of USD 13.7 billion to buy a 46.0% stake in Kuwait's Mobile Telecommunications Co. Liquidity / Capital raising - Liquidity Management House for Investments launched a USD 100.0 million campaign to issue Sukuks in Saudi Arabia. - Total banks' liquid assets rose KWD 166.0 million (including local net inter-bank deposits) in August, following a KWD 163.0 million increase in July. - Gulf Finance House (GFH), the leading Islamic investment bank, received approximately USD 100.0 million in commitment subscription offers prior to the official launch of its capital raising initiative. - Total Bank claims on the private sector, advanced 7.7% in the year to September to KWD 26.8 billion. - KIPCO said the order book for its USD 500.0 million bond closed at USD 3.3 billion, with more than half of the allocation coming from investors in Europe. - Money supply growth slowed to 14.7% in September from 18.8% in August, official data showed. - Money supply (M2) fell KWD 152.0 million months-on-month in August, well below the KWD 548.0 million declines seen in July as Deposits from non-residents rose for the first time in a year. - M3 money supply, rose to KWD 24.6 billion (USD 86.0 billion) in September compared with KWD 21.4 billion a year earlier; M1 rose 3.6% to KWD 4.9 billion and Quasi money rose 17.9% to KWD 19.7 billion. - KIPCO said it will extend the maturity of KWD 40.0 million (USD 139.5 million) worth of bonds by one year. - National Bank of Kuwait has signed a loan agreement with Kuwait Projects Company whereby the latter gets a KWD 80.0 million (USD 279.0 million) for a period of five years to finance company projects. - National Bank of Kuwait has along with local banks provided credit facilities for the USD 2.7 billion Sabiya power plant in Kuwait. TresVista Financial Services, Pvt. Ltd. © Page 5
  • 6. Issue No. 2.02 MENA MONTHLY NEWS Month of October 2009 UAE 1 Month Index Performance CAGR 0.1% Sectors % ▼▲ Company % Change …The Gulf States have 2,400.0 Top 5 Gainers: Insurance Index (2.8%) witnessed huge growth Health Care Index (10.0%) Ekttitab Holding 14.7% 2,350.0 Salama Group 10.4% in external debt over the Telecom Index (4.5%) SB-S 9.6% past few years but the 2,300.0 Construction Index (4.9%) DFM 7.9% DFM Index GFH 7.5% region's strong asset 2,250.0 Energy Index (4.6%) Top 5 Losers: position should enable it 2,200.0 Real Estate Index (7.6%) Al Madina KFIC 9.9% 9.8% Bank&Finance Index (1.7%) to support its Global 6.8% 2,150.0 Industrial Index (3.4%) ARIG 2.4% borrowings, according Consumer Index (5.0%) GGICO 1.9% to Standard Chartered 2,100.0 Oct-01 Bank… Macro Economic News ▲ UAE is increasing its spending by 3.4% to AED 43.6 billion in 2010, up from AED 42.0 billion allocated for 2009. ▲ The International Monetary Fund (IMF) has revised its UAE GDP forecast next year to 3.0% from the earlier projections of 2.7% while Standard Chartered raised its estimates to 4-4.5% from the -0.5% earlier in 2009. ▲ The economy could be recovering faster than expected as the Economy Minister said that he foresees an annual growth rate for 2009 of 1.3%. ▲ Annual inflation rate is currently below 4.0% and the country has no plans to rejoin the Gulf monetary union project, according to the director general of the emirate's council for economic development. ▲ For the first eight months of the year, inflation averaged 2.6% since last year, albeit falling sharply from 7.2% in January. ▲ The HSBC Trade Confidence Index. shows that the UAE is one of the three most confident countries in the world on trade activity, and growth, scoring 118 points up 3.0% from the previous quarter. ▼ Officially released data show that overall consumer prices fell by 0.2% since last year in August. ▼ Due to the impact of the global crisis and 9.5% oil output cuts, BoA Merrill Lynch expects the UAE's GDP to fall by about 1.0% in 2009 followed by a small rise in 2010 to 2.0%. ▼ According to Risk Metrics Group, corporate borrowing defaults will shoot up to 20.0% in 2010 due to a sluggish real estate sector. - According to Nomura Holdings Inc., Dubai and Abu Dhabi need to create about 150,000 white-collar jobs to provide enough buyers for the houses and apartments being completed in the next two years. An estimated 65,000 residential units will be built in Dubai and 15,000 more in Abu Dhabi by 2011. Government Regulations ▲ Chief Economic Advisor at the Abu Dhabi Department of Economic Development (DED) said that a suggested proposal by the Ministry of Economy to have full foreign ownership in certain businesses is likely to be accepted. ▲ Mortgage registration fees, have been cut from 1.7% to 1.3% per cent, while transfer fees have been dropped from 2.0% to 1.0%. According to leading mortgage consultants, the reduction on the transfer fee will have bigger impact as this is charged on the full property price. ▲ The time required for obtaining an industrial license was reduced from 90 days to 11 days as Abu Dhabi attempts to lower bureaucracy and improve the ease of doing business. - A new corporate law intended to ensure that listed companies in the UAE exercise full transparency is to be introduced in April 2010. Sector News ▲ Freight volumes of cargo passing through Dubai have risen by 20.0% in September against the lows of January. ▲ Abu Dhabi's Aldar Properties expects the property market to stabilise next year. House prices in Abu Dhabi are expected to fall 33.0% during 2009 and are forecast to fall 3.0% in 2010. ▲ The value of land transactions for October 2009, in Dubai reached AED 1.7 billion, of which sales exceeded AED 921.6 million. The total value of mortgages during the period was AED 743.1 million, according to the Land Department. ▲ UAE freight is expected to increase by approximately 25.0% in November 2009 in preparation for Eid, according to leading express delivery company TNT Express. ▲ The asset base of the UAE banking system with more than 50 banks reached AED 1.5 trillion as of September 2009. There has been a modest overall growth on all fronts during the Q3 2009 with the asset growing by more than 2.0% during the quarter. ▲ The loan - to - deposit gap at the end of September 2009 stood at AED 43.5 billion, a decrease of 13.5% from August 2009 as banks mopped up AED 13.7 billion in additional monthly deposits. ▲ Dubai International Airport recorded an increase of 19.5% in passenger traffic in September 2009, the highest monthly growth rate since October 2007 when passenger numbers jumped 25.9%. ▲ Rentals for apartment in the Northern Emirates continued to fall in the Q3 2009 but at a slower rate than previously, according to Asteco. The average decline in apartment rental rates has slowed considerably to 4.0% compared with 12.0% in Q2 2009 and 21.0% in the Q1 2009. TresVista Financial Services, Pvt. Ltd. © Page 6
  • 7. Issue No. 2.02 MENA MONTHLY NEWS Month of October 2009 ▲ The UAE insurance sector will grow between 5.0% - 8.0% in 2009 despite the negative impact of the financial crisis on the sector, according to the President of Dubai Insurance Group and Secretary General of Emirates Insurance Association (EIA). …Projects in the Middle East require annual ▼ Vacancy rates in Dubai's office sector will touch 28.0% in 2010 and 31.0% in 2011 as the segment will see additional 11.0 expenditure of AED 6.0 million square feet of space by 2011. billion on construction ▼ Banks in the UAE face a liquidity shortfall estimated at AED 40.0 billion, a top executive of Standard Chartered Bank said. machinery, and The loan-to-deposit gap for the nation’s banks increased to AED 50.3 billion in August compared to AED 46.0 billion in July vehicles, according to this year, according to data released by the UAE Central Bank last month. latest figures from the ▼ About 71.0% of developers say that prices of real estate have not yet bottomed out, according to a Colliers International Ministry of Public survey. 82.0% are still selling their units in the market, compared to 18.0% who have paused sales activity. Works and Housing… ▼ Apartment rentals fell 17.0% in Q3 2009 whereas rents for villas in Dubai increased by 8.0%, according to a Landmark Advisory report. Apartment prices declined by 3.0%, though this decline was less than a 17.0% fall witnessed in the Q2 2009, villa prices on the other hand recorded a 6.0% increase in Q3 2009. ▼ The shipping industry fears a recovery in sea transport may not happen before 2012. Freight rates had fallen by about 80.0%, an estimate almost three times the figure of 30.0% quoted earlier. ▼ A total of 213 building and infrastructure contracts valued at about AED 93.0 billion were awarded during the first three quarters of 2009. According to statistics released by Ventures Middle East, the number of contracts decreased by 58.2% compared to 2008. ▼ According to figures released by the Statistics Centre - Abu Dhabi (Scad), prices of flat steel went down by 11.0%, falling by almost AED 300.0 per tonne. Company News ▲ Dubai World, expects to save more than USD 800.0 million in 3 years after completing business restructuring and cutting its workforce by at least 15.0% to less than 70,000 globally as part of the reshuffle. ▲ Etisalat acquired a 100.0% stake in Tigo Sri Lanka, a wholly owned unit of Luxembourg-based Millicom International Cellular S.A for USD 207.0 million. ▲ Ministry of Finance completed the acquisition of the Emirates Industrial Bank by buying the remaining 49.0% of the company that it didn’t own previously from 13 UAE based entities. ▲ DU plans to spend AED 5.0 billion by 2010 on developing its mobile broadband network, according to the company’s Chief Executive. ▲ Abu Dhabi International Airport and Chicago O’Hare International Airport, signed a MoU to become ‘sister airports’, in a unique twinning arrangement which will see the sharing of technical, commercial, and environmental best practices. ▲ Zakum Development Company plans to award around USD 4.0 billion (AED 14.6 billion) worth EPC contracts over the next 18 months. ▲ Emirates Ship Investment Company won a contract to transport 1.0 million tonnes of alumina annually to a USD 5.7 billion (AED 20.9 billion) aluminum smelter being built in Abu Dhabi. ▲ Rasmala Investments is setting up a SAR 500.0 million (USD 133.3 million) Islamic property fund to tap opportunities in mid - income housing in Saudi Arabia. ▲ Aldar Hotels and Hospitality plans to open seven hotels on Yas Island by November 2009. ▲ Dana Gas said that it had made two gas finds in Egypt with reserves totaling an estimated 86.0 billion cubic feet. ▼ DP World’s global container volumes for the first nine months in 2009 dropped 8.0% from the same period in 2008, while volumes in the UAE were down by 5.0%. The third quarter performed stronger with international volumes down 6.0% year- on-year. - Shaikh Mohammad Bin Rashid Gardens, the AED 200.0 billion venture of Dubai Properties, aims to be the lowest-density development in the region. About 73.0% of the development will be green and open spaces and 10.0% will be allocated to waterways. Liquidity / Capital raising - UAE delayed a final AED 20.0 billion (USD 5.5 billion) tranche of a liquidity injection plan as banks currently don’t need it. - Nakheel repaid an AED 4.4 billion (USD 1.4 billion) securitized bond that was issued in January 2009 and due for repayment on 15 November 2009, according to the Middle East Economic Digest. - Abu Dhabi is rapidly emerging as the debt capital of the region, producing a flurry of multi-billion dollar bond sales. The emirate and its companies have issued more than USD 12.0 billion (AED 44.0 billion) of bonds in 2009, with billions more in the pipeline. - Abu Dhabi Water and Electricity Authority raised AED 8.0 billion (USD 2.2 billion) to fund its Shuweihat S2 water and electricity generation project. - UAE - CB has expanded the EIBOR panel of banks from 11 to 12 by adding Barclays Bank and thus taking the total number of foreign banks from 3 to 4. - Tourism Development and Investment Company (TDIC), has issued the largest GCC sukuk of 2009 with its inaugural USD 1.0 billion five-year Reg S Sukuk Al Ijara under a USD 1.5 billion global sukuk trust certificate issuance programme. TresVista Financial Services, Pvt. Ltd. © Page 7
  • 8. Issue No. 2.02 MENA MONTHLY NEWS Month of October 2009 - Abu Dhabi Commercial Bank agreed to issue USD 1.0 billion of bonds as the initial tranche of its USD 7.5 billion global medium term note programme. …The International Monetary Fund said that - Issuers have raised USD 11.6 billion from the public international debt capital markets in 2009 to date according to Standard the GGC countries are Chartered Bank. set to witness a - Emirates and Etihad secured nearly AED 5.5 billion in financing, backed by foreign guarantees. slowdown in economic growth to 0.7% this - Dubai World is grappling with USD 40.0 billion of debt and may be able to sell bonds to repay loans, including a USD 3.5 year; however, will billion Islamic bond due at the end of 2009. rebound in 2010 to grow - Inter - bank rates in the UAE remained sharply higher than other GCC states, three month inter - bank rates stood at 2.00% by 5.2% on the back of compared with US LIBOR of 0.30% and rates of 0.60% to 1.00% in other GCC countries. rising oil revenue… - Interbank lending rates in the UAE fell to multi-year lows as the dollar-pegged country brings the cost at which banks lend to each other into line with its neighbors and the United States. The one-month Emirates Interbank Offered Rate declined to 1.51%, its lowest level since July 2004. - Dubai Holding repaid a USD 250.0 million loan to BNP on maturity date. This follows a repayment of a USD 300.0 million syndicated loan of its Sama unit - Dhabi’s Aabar Investments made an investment of USD 328.0 million in American Depositary Shares issued by Banco Santander (Brasil) S.A., the Brazilian subsidiary of Banco Santander S.A. TresVista Financial Services, Pvt. Ltd. © Page 8
  • 9. Issue No. 2.02 MENA MONTHLY NEWS Month of October 2009 Egypt Company % Change es …Sovereign wealth 1 Month Index Performance CAGR 0.4% Top 5 Gainers: 670.0 MH 16.7% funds of Gulf oil WBE 13.4% 660.0 producers lost about Rakta 9.2% 650.0 National Cement 8.9% USD 90.0 billion in The Ghabbour Group 5.4% Hermes Index 2008, but are expected 640.0 Top 5 Losers: DSC 9.2% to gain nearly USD 630.0 PBE 4.8% 134.0 billion in 2009 620.0 Arab Land Reclamation 4.3% NAEEM 3.2% following an 610.0 Alexandria Flour Mills 2.9% improvement in crude 600.0 Oct-01 prices… Macro Economic News ▼ A report issued by Egypt's Information and Decision Support Center (IDSC) showed that Suez Canal revenues for September retreated by 18.5% to USD 382.5 million, compared with USD 469.6 million a year earlier. Company News ▲ El Sewedy Cables announced that it entered an alliance to establish an EGP 1.0 billion electrical line in Abou Kir-Badr city. ▲ Egyptian property developer Talaat Moustafa is seeking bids for building work on a residential and commercial project worth SAR 6.0 billion - SAR 7.5 billion in Saudi Arabia. ▲ Crédit Agricole Egypt announced that it has presented an offer to fully acquire The Egyptian Company for Mortgage by buying the remaining 50.0% of the latter's capital. - Pioneers Holdings for Financial Investments announced the acquisition of a 76.0% stake in a financial institution in Morocco and later canceled the acquisition procedures. - The Arab Cotton Ginning Company would divest its real estate holdings from its cotton production operation and is offering the land for new housing and commercial developments. - Orascom Development Holding has acquired a 90.0% stake in Lustica Development to develop a touristic project in Tivat. Liquidity / Capital Raising - Arab Medical Packing increased its authorized capital from EGP 70.0 million to EGP 150.0 million, and completed the voluntary de-listing of the company's shares from the Egyptian Exchange. - Seven Egyptian banks will give a USD 292.1 million loan to Saudi Al-Hokair group. - The Commercial International Bank, or CIB, will arrange a USD 250.0 million syndicated loan to the Egyptian Drilling Co. TresVista Financial Services, Pvt. Ltd. © Page 9
  • 10. Issue No. 2.02 MENA MONTHLY NEWS Month of October 2009 Other Countries …UAE Central Bank Oman Governor called for ▲ The economy will grow by 2.5% in 2009, according to the Ministry of National Economy (MONE). The undersecretary of setting up a regional MONE expected the economy to exceed the planned growth of 1.0% in 2009 due to better performance of various sectors. financial market for ▲ Oman used USD 300.0 million out of the USD 2.0 billion 'Support Fund' to help domestic companies get out of recession and MENA to tackle any may not require the balance USD 1.7 billion as the economy has been recovering quickly from the impending financial crisis, future financial crisis. according to the central bank governor. The proposed stock market will act as an ▲ Commercial banks' total assets increased by 9.0% since last year, to OMR 13.8 billion in August 2009 from OMR 12.6 billion alternative when global a year ago. The expansion in assets was driven by 12.9% growth in credit which stood at OMR 9.5 billion as at the end of August financial markets stop 2009 compared to OMR 8.4 billion at the end of August 2008. trading at time of ▲ Arab Monetary Fund said that Oman's economy is expected to grow by nearly 3.2% in 2009 despite a sharp fall in Q1 2009. crisis… ▲ Oman is seeking foreign investments worth USD 2.5 billion in industrial projects in its planned Sohar free zone to create jobs as the Sultanate tries to diversify its oil-based economy. ▲ The Tender Board awarded tenders worth OMR 83.3 million. Major tenders awarded include construction of 220/33 KV transformer station in Al Sawadi for OMR 22.9 million, construction of 132/33 KV power plant in Muttrah for OMR 8.7 million, medical equipment at Al Nahdha Hospital and other hospitals for OMR 8.1 million. ▲ The number of arrival and departure passengers through Muscat International Airport increased by 8.0% during the first eight months of 2009 to 2.9 million passengers. ▲ Oman plans to invite bids in December 2009 for the construction of a 230.0 km railway, part of a planned Gulf Arab network valued at up to USD 25.0 billion. ▲ Central Bank of Oman (CBO) said that the two local banks that had borrowed from the government support fund in the wake of the global financial crisis have repaid USD 200.0 million of the USD 300.0 million funds. ▼ As per MONE statistics, inflation rose to 1.9% in August 2009 due to a sharp rise in food prices and property rents. - Averda, a leading environmental services company, has acquired a 70.0% stake in TWM (Technique Waste Management), with the remaining shares held by the original Omani shareholders. - CBO issues Certificates of Deposit worth OMR 491.0 million, with an average interest rate of 0.04% while the maximum accepted interest rate was 0.06%. The tenor of certificates is 28 days with their maturity date in November 2009. - Oman National Engineering and Investment Company announced that it is planning to merge with Oman Investment and Finance Company. - Singapore’s Sembcorp, the preferred bidder on Oman’s Salalah IWPP, is attempting to raise finance from five Chinese banks to help fund the USD 1.0 billion project. - Oman Oil Company (OOC) has bought a 30.0% stake in block 18 and a 25.0% per cent share in block 41 from Reliance Industries in the Gulf of Oman. - Oman Flour Mills, through a joint venture between Atyab Investments and IFFCO, has plans to purchase a minimum of 90.0% of the share capital of Sohar Poultry Company. - Private sector deposits increased by 3.4% to OMR 6.4 billion, representing 73.1% of total deposits, whereas Government deposits rose by 30.9% to OMR 1.8 billion, representing 20.0% of total deposits, and deposits by public enterprises increased in absolute terms by OMR 308.3 million to OMR 605.9 million. - Broad money M2 increased by 7.6% to OMR 7.7 billion in August 2009 over the corresponding period in 2008. M1 registered an increase of 5.9% over the twelve month period ending in August 2009 to reach OMR 2.0 billion. Jordan ▲ The Samra power plant will have an increased capacity of 900.0 MW, making it the largest capacity electricity plant in the country with the expansion of two gas-fire units each of 142.9 MW capacity, due to be completed in early 2011. ▲ Jordan's trade deficit narrowed 23.5% to JOD 3.5 billion (USD 4.9 billion) from January to August, against the same period 2008, due to a lower bill for imported Saudi oil. ▲ Jordan has set a USD 7.8 billion budget for 2010, with plans to slash the growing deficit deepened by the global financial crisis by high spending on salaries, pensions, and debt interest. The projected government expenditure for 2010 focuses on fiscal prudence to substantially diminish Jordan's deficit to USD 966.0 million or 3.9% of GDP. ▲ Foreign grants estimated for 2010 were put at JOD 435.0 million compared to JOD 405.0 million in 2009, maintained at 2.5% of the GDP. The government expects the rate to go down to 2.2% and 2.0% in 2011 and 2012 respectively, further boosting the reliance and use of domestic resources in financing public expenditure. ▲ Investments in the Aqaba SEZ reached USD 18.0 billion, 300.0% more than the USD 6.0 billion targeted by 2020. ▲ The Jordanian cabinet approved a number of partnership agreements signed between the Jordanian National Petroleum Company and British Petroleum (BP). In the first phase, BP would spend USD 237.0 million on exploration and evaluation. ▼ Jordan's budget deficit rose to JOD 876.0 million dinars (USD 1.2 billion) in the first nine months of 2009, more than double the figure for the same period of 2008. TresVista Financial Services, Pvt. Ltd. © Page 10
  • 11. Issue No. 2.02 MENA MONTHLY NEWS Month of October 2009 ▼ Economic foreign grants geared towards supporting the 2009 budget was JOD 102.7 million till Q3 2009, a fall of 79.2% compared to the same period of 2008. …The HSBC Gulf Business Confidence ▼ Real estate deals in the various regions and governorates of the Sultanate stood at OMR 225.0 million in the Q3 2009, a fall of Index rose to 81.4 in Q3 61.0% compared to the same period of 2008. 2009 from 75.9 in Q2 ▼ Oman posted a 36.3% drop in net oil revenues in the first eight months of 2009 but raised spending by 1.7%. 2009, the best result in ▼ During the H1 2009, the industrial production index went down by 1.8% and the industrial sector’s contribution to the GDP the index for the past 12 dropped to 20.4% from 20.7%. months… ▼ The construction sector in 2010 will be marked by a major decline compared to its performance in the past three years, according to Jordan Construction Contractors Association President. The construction and contracting sector is behind 80.0% - 90.0% of business in other sectors in the Kingdom. ▼ Department of Statistics (DOS) data showed the slump in oil prices along with a drop in consumption lowered the value of imports in the period by 21.5% to JOD 6.5 billion against JOD 8.3 billion in the same period last year. ▼ Total exports reached JOD 3.0 billion in the January to August period, down 19.1% from last year. ▼ Jordan's economic growth rate is expected to drop to 3.0% this year against an average annual rate of around 7.0% in the last decade as the global economic downturn has hit remittances and investments while domestic demand slumped. ▼ A survey conducted by Jordan's Lands and Survey Department found that the value of real estate trading in the kingdom fell by 38.0% by Q3 2009 compared with Q3 2008. - The treasury received a USD 50.0 million direct cash transfer from the US, according to a report issued by the Ministry of Planning and International Cooperation. The transfer brought the total amount of direct budget support received from the US this year to around USD 143.0 million. - M2 money supply, rose to JOD 19.5 billion (USD 27.5 billion) at end August 2009, from JOD 18.3 billion at the start of the year, released data by the Central Bank of Jordan (CBJ) showed. - Aqaba Development Corporation announced the completion of the largest corporate bond issue in the history of Jordan. The five-year bond issue amounts to JOD 125.0 million at a fixed-interest rate of 7.80% per annum for the first 30 months and a variable interest rate for the remaining 30 months. - Jordan's money supply growth slowed to 6.3% in the year to August, from a growth of 14.6% during the same period in 2008. Bahrain ▲ Bahrain will create 185,000 new jobs in the next five years as it tackles unemployment among its educated workforce. ▲ Bahrain's Gulf Finance House agreed to sell 10.0% of its 15.0% stake in investment bank QInvest to Qatar Islamic Bank for USD 50.0 million. ▲ Capital Management House has been granted an Islamic investment banking license by the country's central bank. ▲ Bahrain's shariah compliant Gulf Finance House plans to set up a new Islamic bank in Q4 2009. ▲ Manara Development Co. received the official approval for its Al Nurana project, with an estimated cost of USD 1.0 billion. ▼ The official rate of unemployment in Bahrain rose to 4.1%. - Director of the Bahrain Stock Exchange Mr. Fouad Rashid issued a resolution to list a BHD 165.0 million Islamic Leasing (Ijara) Sukuk of the Kingdom of Bahrain that was issued by the Central Bank of Bahrain on behalf of the Government of the Kingdom of Bahrain. - Investcorp portfolio company, Moody International, announced the acquisition of US-based PetroSpect Inspection Services. - Bahrain-listed Ithmaar Bank said it would turn itself into an Islamic bank with retail license once it has integrated its wholly-owned subsidiary Shamil Bank into its operations. - Arab Insurance Group entered into a 50-50 joint venture with Hardy Underwriting Bermuda Limited to establish Hardy Arig Insurance Management, Bahrain. - Arab Banking Corporation announced that its fully owned subsidiary, ABC International Bank, has completed a USD 90.0 million committed trade financing facility for Jaguar Land Rover. - Khaleeji Commercial Bank announced that it has signed a QAR 250.0 million financing deal with Saudi Automotive Services Company to finance the latter's supply of electrical parts to Qatar General Electricity and Water Corporation. Qatar ▲ Hassad Food Company, owned by Qatar’s Investment Authority, announced the establishment of a joint venture with a capital of USD 100.0 million in Sudan, as part of a planned USD 1.0 billion agricultural investment in the African country. ▲ Qatar Industrial Manufacturing Company announced that it plans to establish, along with a strategic partner, a Chlorinated Paraffin Wax joint venture for a total value of QAR 300.0 million. ▲ The Public Works Authority signed over a dozen contracts worth over QAR 1.5 billion relating to infrastructure projects across the country. ▲ Barwa Real Estate Company announced that it has entered a joint venture with Qatar Insurance Company, Qatar Islamic Bank, Rayan Bank, and QInvest Company to establish a QAR 100.0 million Islamic insurance company. TresVista Financial Services, Pvt. Ltd. © Page 11
  • 12. Issue No. 2.02 MENA MONTHLY NEWS Month of October 2009 ▲ National Bank will fully finance the development of Iran's Esfandiar oil field, according to the country's oil ministry. …GCC foreign direct ▼ Qatar's inflation has declined by 1.1% compared to September last year on lower food prices and continued easing of rent. investment inflows grew - Ezdan Real Estate Co., Qatar General Insurance & Reinsurance Co., and Al Sari Trading Co. signed a memorandum of 31.5% in 2008, and at a understanding to develop a joint real estate project with an estimated cost of about QAR 2.5 billion (USD 686.5 million). CAGR of 57.2% during - Qatar's Barwa Bank said it will arrange a financing of USD 137.3 million for Qatari Diar Real Estate Investment Co. the period 2003-2008... - Industries Qatar announced that its 75.0% owned subsidiary, Qatar Fertiliser Company has issued a letter of intent for the execution of the 35-month USD 610.0 million Engineering Procurement Construction (EPC) contract with Saipem (Italy) and Hyundai Engineering & Construction Company (South Korea) to establish QAFCO-6. - Qatar Insurance Company’s Board of Directors approved the Company to enter into a joint venture with QIC International to establish a reinsurance company under the name of Q-Re LLC, with a paid up capital of QAR 185.0 million. - The BOD of Qatar Shipping Company met and signed a contract with Qatar America Asia Consortium (QAAC) to sell the company's full stake in Qatar Engineering and Construction Company to QAAC for a total value of USD 110.0 million. - Qatar's Barwa Real Estate Co., an affiliate of the country's sovereign wealth fund, plans to start handing over in the Q1 2010 units in a USD 510.0 million project in Qatar. Tunisia ▲ The central bank showed that the consumer price index eased to 3.4% for the January - August period in 2009, compared to 5.4% in the same period in 2008. ▲ The Tunisian Government granted an oil exploration permit covering an area of 312.0 sq km to Canada based Storm Company as part of a production sharing agreement with Tunisia's oil company, ETAP. Mergers & Acquisitions Announced Completion Transaction Value TV/LTM TV/ LTM S. No. Target Acquirer Industry date date (In USD mn) Revenues EBITDA 1 Qinvest Llc Qatar Islamic Bank Financial Services 27-10-09 - 500.0 NA NA 2 Tigo Pvt Ltd Emirates Telecom Corporation Telecommunications 15-10-09 - 155.0 NA NA 3 Landmark Building Qatar First Investment Bank Real Estate 27-10-09 - 50.8 NA NA About Us: Headquartered in Mumbai, India, TresVista Financial Services Pvt. Ltd provides research, analytics, advisory, investor relations, and other customized services for asset managers, private equity funds, investment banks, operating companies, and other institutions. This document is provided for assistance only and must not alone be taken as the basis for an investment decision. The user assumes the entire risk of any use made of this information. Each recipient of this document should make such investigation as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits and risks involved), and should consult his own advisors to determine the merits and risks of such investment. This newsletter is provided for information purposes only. The information is believed to be reliable and is based on publicly available information, but TresVista does not warrant its completeness or accuracy. Opinions, estimates, and assumptions constitute our judgment as of the date hereof and are subject to change without notice. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Additional information is available upon request. 2009 TresVista Financial Services © TresVista Financial Services Premier House, Plot No.38, 2nd Floor, New Wing, Central Road, MIDC, Andheri (East), Mumbai 400 093. TresVista Financial Services, Pvt. Ltd. © Page 12