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Page 1 of 7
QE Intra-Day Movement
Qatar Commentary
The QE index rose 1.8% to close at 13,522.8. Gains were led by the Bank...
Page 2 of 7
Qatar Market Commentary
 The QE index rose 1.8% to close at 13,522.8. The Banking &
Financial Services and In...
Page 3 of 7
08/13 UK ONS ILO Unemployment Rate 3Mths June 6.40% 6.40% 6.50%
08/13 UK London Silver Mar. Fixin London Silve...
Page 4 of 7
and said the property market posed risks to Britain’s recovery.
 Portugal seen escaping relapse a...
Page 5 of 7
have been dragged down since the end of 2010 by the
deteriorating creditworthiness of their respective soverei...
Page 6 of 7
user-friendly accounting and resource planning system. Riyadat
is a joint venture between Bahrain Development ...
Saugata Sarkar Abdullah Amin, CFA Shahan Keushgerian
Head of Research Senior Research Analyst Senior Research Ana...
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13 August Daily market report


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13 August Daily market report

  1. 1. Page 1 of 7 QE Intra-Day Movement Qatar Commentary The QE index rose 1.8% to close at 13,522.8. Gains were led by the Banking & Financial Services and Industrial indices, gaining 2.2% and 2.1%, respectively. Top gainers were Vodafone Qatar and Mesaieed Petrochem. Holding Co. rising 7.9% and 6.4%, respectively. Among the top losers, Zad Holding Co. fell 2.5%, while Mazaya Qatar Real Estate Dev. declined 1.2%. GCC Commentary Saudi Arabia: The TASI index rose marginally to close at 10,593.1. Gains were led by the Agr. & Food and Build. & Const. indices, rising 1.9% and 1.8%, respectively. Ash Sharqiyah Dev. gained 9.8%, while Al Khodari was up 5.3%. Dubai: The DFM index declined 0.1% to close at 4,805.1. The Transportation index fell 1.0%, while the Real Estate & Const. index was down 0.3%. Int. Financial Advisors declined 6.7%, while National Industries was down 5.2%. Abu Dhabi: The ADX benchmark index rose 0.3% to close at 5,003.0. The Insurance index gained 3.9%, while the Inv. & Fin. Ser. index was up 1.0%. Abu Dhabi National Insurance Co. surged 14.6%, while BILDCO gained 6.9%. Kuwait: The KSE index gained 0.2% to close at 7,245.7. The Consumer Goods index rose 0.8%, while the Financial Ser. index was up 0.5%. Coast Inv. & Dev. Co. rose 8.8%, while Credit Rating & Collection was up 5.6%. Oman: The MSM index rose 0.1% to close at 7,298.4. Gains were led by the Financial and Industrial indices, rising 0.6% and 0.3%, respectively. Al Sharqia Investment Holding rose 6.2%, while Al Jazeera Services was down 5.6%. Bahrain: The BHB index declined 0.5% to close at 1,470.1. The Commercial Banking fell 1.3 %, while the Investment index was down 0.2%. National Bank of Bahrain declined 6.2%, while Al Baraka Banking Group was down 1.2%. Qatar Exchange Top Gainers Close* 1D% Vol. ‘000 YTD% Vodafone Qatar 21.40 7.9 5,647.4 99.8 Mesaieed Petrochem. Holding Co. 36.00 6.4 2,598.0 260.0 Masraf Al Rayan 56.50 3.7 2,137.6 80.5 Islamic Holding Group 86.50 3.6 434.0 88.0 Industries Qatar 179.00 3.5 674.7 6.0 Qatar Exchange Top Vol. Trades Close* 1D% Vol. ‘000 YTD% Vodafone Qatar 21.40 7.9 5,647.4 99.8 Ezdan Holding Group 19.89 1.0 3,161.5 17.0 Mesaieed Petrochem. Holding Co. 36.00 6.4 2,598.0 260.0 Masraf Al Rayan 56.50 3.7 2,137.6 80.5 Salam International Investment Co. 21.15 0.8 1,983.9 62.6 Market Indicators 13 Aug 14 12 Aug 14 %Chg. Value Traded (QR mn) 1,142.8 949.6 20.3 Exch. Market Cap. (QR mn) 720,907.2 705,912.0 2.1 Volume (mn) 28.2 24.3 16.0 Number of Transactions 11,352 10,021 13.3 Companies Traded 42 43 (2.3) Market Breadth 28:11 28:14 – Market Indices Close 1D% WTD% YTD% TTM P/E Total Return 20,169.11 1.8 3.4 36.0 N/A All Share Index 3,417.99 1.7 3.4 32.1 16.8 Banks 3,266.50 2.2 3.1 33.7 16.0 Industrials 4,470.73 2.1 4.2 27.7 18.1 Transportation 2,366.35 (0.2) 1.7 27.3 15.1 Real Estate 2,966.91 0.1 4.7 51.9 16.0 Insurance 3,954.30 1.3 2.8 69.3 12.5 Telecoms 1,642.70 2.0 2.8 13.0 23.3 Consumer 7,588.48 0.1 3.3 27.6 28.4 Al Rayan Islamic Index 4,655.16 1.6 4.0 53.3 20.3 GCC Top Gainers## Exchange Close# 1D% Vol. ‘000 YTD% Abu Dhabi Nat. Ins. Abu Dhabi 6.60 14.6 10.4 11.9 Vodafone Qatar Qatar 21.40 7.9 5,647.4 99.8 RAKBANK Abu Dhabi 9.70 6.2 1,001.7 35.9 National Investments Co Kuwait 0.16 5.3 1,006.0 (1.3) Saudi Fisheries Saudi Arabia 43.25 4.8 7,932.4 40.0 GCC Top Losers## Exchange Close# 1D% Vol. ‘000 YTD% Nat. Bank Of Bahrain Bahrain 0.84 (6.2) 13.5 20.1 Shell Oman Marketing Oman 2.00 (4.8) 40.1 (14.9) Gulf Pharmaceutical Abu Dhabi 3.00 (4.5) 110.0 0.9 Combined Group Cont. Kuwait 0.97 (3.0) 4.0 (20.4) Jabal Omar Dev. Co. Saudi Arabia 53.94 (2.8) 3,937.6 84.7 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% Zad Holding Co. 87.50 (2.5) 4.5 25.9 Mazaya Qatar Real Estate Dev. 22.00 (1.2) 1,983.6 96.8 Qatar German Co. for Med. Dev. 14.20 (1.0) 433.1 2.5 Qatar General Ins. & Reins. Co. 46.80 (0.8) 1.5 17.2 Qatar Gas Transport Co. 25.00 (0.8) 534.4 23.5 Qatar Exchange Top Val. Trades Close* 1D% Val. ‘000 YTD% Industries Qatar 179.00 3.5 119,789.5 6.0 Masraf Al Rayan 56.50 3.7 119,143.9 80.5 Vodafone Qatar 21.40 7.9 118,325.0 99.8 Mesaieed Petrochem. Holding Co. 36.00 6.4 91,584.2 260.0 QNB Group 187.90 2.7 77,686.6 9.2 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* 13,522.79 1.8 3.4 5.0 30.3 313.82 197,961.1 16.9 2.2 3.7 Dubai 4,805.07 (0.1) 1.5 (0.6) 42.6 79.86 93,310.1 20.0 1.8 2.1 Abu Dhabi 5,003.03 0.3 1.6 (1.0) 16.6 34.05 137,807.8 14.2 1.8 3.3 Saudi Arabia 10,593.10 0.0 0.4 3.7 24.1 2,886.11 578,041.2 20.4 2.6 2.7 Kuwait 7,245.71 0.2 0.8 1.6 (4.0) 79.62 113,336.8 17.2 1.1 3.8 Oman 7,298.35 0.1 (0.5) 1.4 6.8 18.36 26,915.5 11.1 1.7 3.8 Bahrain 1,470.13 (0.5) (1.6) (0.1) 17.7 1.38 54,246.1 11.6 1.0 4.6 Source: Bloomberg, Qatar Exchange, Tadawul, Muscat Securities Exchange, Dubai Financial Market and Zawya (** TTM; * Value traded ($ mn) do not include special trades, if any) 13,260 13,310 13,360 13,410 13,460 13,510 13,560 9:30 10:00 10:30 11:00 11:30 12:00 12:30 13:00
  2. 2. Page 2 of 7 Qatar Market Commentary  The QE index rose 1.8% to close at 13,522.8. The Banking & Financial Services and Industrial indices led the gains. The index rose on the back of buying support from non-Qatari shareholders despite selling pressure from Qatari shareholders.  Vodafone Qatar and Mesaieed Petrochem. Holding Co. were the top gainers, rising 7.9% and 6.4%, respectively. Among the top losers, Zad Holding Co. fell 2.5%, while Mazaya Qatar Real Estate Dev. declined 1.2%.  Volume of shares traded on Wednesday rose by 16.0% to 28.2mn from 24.3mn on Tuesday. However, as compared to the 30-day moving average of 15.8mn, volume for the day was 78.5% higher. Vodafone Qatar and Ezdan Holding Group were the most active stocks, contributing 20.0% and 11.2% to the total volume respectively. Source: Qatar Exchange (* as a % of traded value) Earnings and Global Economic Data Earnings Releases Company Market Currency Revenue (mn)2Q2014 % Change YoY Operating Profit (mn) 2Q2014 % Change YoY Net Profit (mn) 2Q2014 % Change YoY Al Sagr National Insurance Co. (ASNIC) Dubai AED 90.5 -6.9% 2.5 -48.0% 51.6 NA Abu Dhabi National Energy Co. (TAQA) Abu Dhabi AED 6,517.0 11.2% – – 239.0 NA Abu Dhabi National Co. for Building Materials (BILDCO) Abu Dhabi AED 6.1 -55.5% – – 8.7 2480.8% Green Crescent Insurance Co. (GCIC) Abu Dhabi AED 21.0 -64.0% 2.3 -49.6% -6.5 NA Fujairah Cement Industries Co. (FCI) Abu Dhabi AED 145.8 -7.1% – – 6.1 NA Emirates Driving Co. (EDC) Abu Dhabi AED 49.8 26.6% – – 19.8 101.4% Gulf Pharmaceutical Industries (Julphar)* Abu Dhabi AED 761.7 NA – – 455.1 NA Union Insurance Co. (UIC)* Abu Dhabi AED 295.0 57.8% – – 23.6 11.3% National Biscuit Industries (NABIL)* Oman OMR 6.0 4.8% – – 0.4 25.6% Oman National Investment Corporation Holding (ONIC Holding)* Oman OMR – – – – 4.1 -24.4% Al Ahlia Insurance Co. Bahrain BHD 3.0 -43.4% 0.2 -59.7% 0.4 -67.6% United Gulf Investment Corporation (UGIC) Bahrain BHD 10.0 50.4% – – 0.3 -91.2% Bahrain Shipping Repairing & Engineering (BASREC) Bahrain BHD 1.2 5.8% – – 0.3 94.2% Bahrain Car Parks Co. (BCPC) Bahrain BHD 0.4 -5.5% 0.5 57.9% 0.5 45.5% Source: Company data, DFM, ADX, MSM (* 1H2014 results) Global Economic Data Date Market Source Indicator Period Actual Consensus Previous 08/13 US US Census Bureau Retail Sales Ex Auto MoM July 0.10% 0.40% 0.40% 08/13 US US Census Bureau Retail Sales Ex Auto and Gas July 0.10% 0.40% 0.60% 08/13 US US Census Bureau Retail Sales Control Group July 0.10% 0.40% 0.50% 08/13 US US Census Bureau Business Inventories June 0.40% 0.40% 0.50% 08/13 US US Treasury 10Y High Yield Rate 13-August 2.44% – 2.60% 08/13 US US Treasury 10Y Bid/Cover Ratio 13-August 2.8 – 2.6 08/13 US US Treasury 10Y Indirect Accepted % 13-August 47.00% – 39.60% 08/13 US US Treasury 10Y Direct Accepted % 13-August 15.10% – 13.90% 08/13 EU Eurostat Industrial Production SA MoM June -0.30% 0.40% -1.10% 08/13 France INSEE CPI EU Harmonized MoM July -0.40% -0.30% 0.00% 08/13 France INSEE CPI EU Harmonized YoY July 0.60% 0.60% 0.60% 08/13 France INSEE CPI MoM July -0.30% -0.30% 0.00% 08/13 FRANCE INSEE CPI YoY July 0.50% 0.50% 0.50% 08/13 Germany Destatis Wholesale Price Index MoM July 0.10% – -0.10% 08/13 Germany Destatis Wholesale Price Index YoY July -0.70% – -0.80% 08/13 UK ONS Jobless Claims Change July -33.6K -30.0K -39.5K Overall Activity Buy %* Sell %* Net (QR) Qatari 63.79% 71.71% (90,505,129.98) Non-Qatari 36.21% 28.29% 90,505,129.98
  3. 3. Page 3 of 7 08/13 UK ONS ILO Unemployment Rate 3Mths June 6.40% 6.40% 6.50% 08/13 UK London Silver Mar. Fixin London Silver Market Fixing 13-August 19.9 – 20.1 08/13 UK London Silver Mar. Fixin London Gold Market PM Fix 13-August 1312.0 – 1315.8 08/13 Spain INE CPI Core MoM July -1.10% – 0.00% 08/13 Spain INE CPI MoM July -0.90% -0.90% 0.00% 08/13 Italy INE General Government Debt June 2,168.4B – 2166.3B 08/13 China Nat. Bureau of Statistics Retail Sales YTD YoY July 12.10% 12.20% 12.10% 08/13 China Nat. Bureau of Statistics Retail Sales YoY July 12.20% 12.50% 12.40% 08/13 China Nat. Bureau of Statistics Industrial Production YTD YoY July 8.80% 8.80% 8.80% 08/13 China Nat. Bureau of Statistics Industrial Production YoY July 9.00% 9.20% 9.20% Source: Bloomberg (s.a. = seasonally adjusted; n.s.a. = non-seasonally adjusted; w.d.a. = working day adjusted) News Qatar  MSCI adds MPHC to MSCI EM Index – Index provider MSCI has added Mesaieed Petrochemical Holding Company (MPHC) – a subsidiary of Qatar Petroleum (QP) – to its MSCI Emerging Market Index (MSCI EM Index). The change will increase the overall weight of Qatar to 0.6% from 0.5% in MSCI EM Index, according to a summary document disclosed by MSCI. The three additions to the MSCI Emerging Markets Index measured by full company market capitalization will be MPHC (Qatar), LPP (Poland) and Brait (South Africa). Changes will be implemented as of the close of August 29, 2014 (for Qatar, this implies closing prices effective as of Thursday August 28). MSCI has also reviewed securities in Qatar for potential increases in Foreign Ownership Limits (FOLs) following a change in the FOL calculation methodology applied by the Qatar Central Securities Depositary (QCSD). As a result, QNB Group, Industries Qatar and Qatar Islamic Bank will have their FOLs increased to 0.25 in the MSCI Qatar Index effective August 29. The change in the FOL calculation methodology will also result in the addition of Mesaieed Petrochemical to the MSCI Qatar Index. Investors should also remember that adjustment factors of 0.5x were applied at the time of the May 2014 Semi-Annual Index review to the weight of four securities namely: 1) QNB Group (QNBK), 2) Industries Qatar (IQCD), 3) Commercial Bank of Qatar (CBQK) and 4) Doha Bank (DHBK) in the MSCI Qatar Index due to potential reduction in their foreign room following the market reclassification of the MSCI Qatar Index from Frontier Markets to Emerging Markets. However, increases of the adjustment factor to 1 for these securities may be considered only starting from the November 2014 Semi-Annual Index Review. (MSCI Summary and Reuters)  Ashghal: C-Ring road expansion project enters new phase – The Public Works Authority (Ashghal) said that the C-Ring Road in Doha will see major development, including the addition of an extra lane on either side, with the fourth phase of work starting on Friday. According to Ashghal, the C-Ring Road project will enhance the road design and increase its capacity to accommodate projected traffic increases. With the addition of a fourth lane, the C-Ring road’s capacity is expected to increase by around 25%. (  QTA: Qatar receives more than 136,000 visitors during Ramadan period from the GCC countries – The Qatar Tourism Authority (QTA) has announced that Qatar received more than 136,000 visitors from the GCC countries during the Ramadan period and around 100,000 visitors during the Eid al- Fitr celebrations. According to the QTA, the occupancy rates of leading five and four-star hotels, as well as hotel apartments in Qatar reached 90% during the peak days of Eid. QTA’s Chief Tourism Development Officer Hassan al-Ibrahim said that the numbers for Ramadan and Eid in Qatar reflected the continuous growth of the country’s expanding tourism sector, with the number of GCC visitors increasing by 5% in the first quarter of 2014. (  QA plans flights to Asmara from December 4 – Qatar Airways (QA) has announced a further expansion of its African operations with plans to launch scheduled flights to Eritrea’s capital city Asmara, effective from December 4, 2014. The twice-weekly flights will operate from Doha to Asmara and will be served by an Airbus A320, featuring 12 seats in business class and 132 seats in economy class. (  ORDS strikes high-speed internet deal with InterCon hotels group – Ooredoo (ORDS) has announced a multi-year deal with InterContinental Hotels Group Qatar, which will see the former provide high-speed fibre internet throughout InterContinental Doha, InterContinental Doha The City and Crown Plaza Doha the Business Park. The agreement also outlined ORDS’ role in distributing entertainment access to the hotels, with Mozaic TV to be installed in over 1,200 rooms throughout the three properties. ( International  US retail sales pause, seen rebounding in months ahead – US retail sales unexpectedly stalled in July, pointing to some loss of momentum in the economy early in the third quarter. Economists said with the job growth holding sturdy, sales activity was likely to rebound in the coming months. The Commerce Department said that retail sales, which had increased 0.2% in June, were in part held back by a second straight month of declines in receipts at auto dealers. The July's reading was the weakest since January. Economists had forecasted sales, which account for a third of consumer spending, increasing 0.2% last month. The economy has experienced six consecutive months of job growth above 200,000. Layoffs and job openings are back to their pre- recession levels. Data on manufacturing and services sectors have suggested the economy was growing solidly. Still, the pause in retail sales could give the Federal Reserve ammunition to maintain its easy monetary policy stance for a while. The US central bank has kept its benchmark overnight interest rate near zero since December 2008. (Reuters)  London leads UK housing slowdown after Carney warnings – London house-price growth eased to the slowest in more than three years last month after the new mortgage rules and Bank of England (BoE) intervention put potential buyers on alert. The Royal Institution of Chartered Surveyors said an index of values dropped to 10 from 30 in June. That’s the lowest since March 2011. The report also showed that surveyors have cut their forecast for price growth. Demand in the capital fell at the fastest pace in six years last month after a surge in prices over the previous year stretched affordability and prompted concerns that a bubble may be brewing. BoE Governor Mark Carney announced measures in June to curb a buildup of housing debt
  4. 4. Page 4 of 7 and said the property market posed risks to Britain’s recovery. (Bloomberg)  Portugal seen escaping relapse as economists back export drive – According to a Bloomberg News survey, the Portuguese government’s mix of tax increases and spending cuts has put the country on a sustainable economic path. Not a single economist expects Portugal to revert to running up large current account and budget deficits, with all 10 economists saying the country’s economic adjustment will persist as the recovery picks up speed. Portugal, which a year ago emerged from its longest recession in at least 25 years, will probably say today that the economy expanded 0.5% in the second quarter, according to a separate survey. The National Statistics Institute is scheduled to publish the preliminary GDP figures for the three months ending June 30. Prime Minister Pedro Passos Coelho still has to cut spending to meet the budget targets after relying mostly on tax increases last year. Portugal in May exited a three-year bailout program from the EU and IMF without the safety net of a precautionary credit line. (Bloomberg)  Unexpected drop in Euro zone output clouds recovery hopes – Euro zone industrial production contracted unexpectedly in June, hurting hopes of a stronger recovery as the region feels the effect of conflict in Ukraine, Iraq and Gaza. The factory output fell 0.3% in June after a 1.1% drop in May, as compared to the market expectations of a 0.3% rise. Production was flat as compared to the year-ago period, after an upwardly revised 0.6% rise in May. Economists polled by Reuters had forecasted a 0.1% annual increase in June. The annual reading was the lowest since August 2013. The monthly drop was caused mainly by a 1.9% drop in production of non-durable consumer goods, down for a second consecutive month, and a 0.7% decline in energy production, which was up in the previous three months. A recovery by the €9.6tn economy is struggling to gain momentum a year after exiting recession. High unemployment, sluggish reforms and the fallout from the conflict in Ukraine, Gaza and Iraq are holding it back. The latest sign of just how fragile the Euro zone's economic rebound remains came from Germany, where investor sentiment dove to its lowest since December 2012 on concerns about the impact European sanctions against Russia will have. Eurostat will publish a flash estimate of second-quarter economic growth on Thursday. Economists had expected an expansion of 0.2% in the second quarter, the same pace as seen in the first quarter. (Reuters)  China's July economic data points to further softness – China's economy showed further signs of softening in July despite a burst of government stimulus measures, suggesting more policy support may be needed to keep growth on track as a property downturn worsens. Unexpectedly weak growth in investment, retail sales and bank lending in July all pointed to growing vulnerabilities in the world's second-largest economy. The biggest surprise from Wednesday's data deluge came from credit and financing figures that showed the amount of cash flowing into the world's second-largest economy tumbled to a near six-year low in July of 273.1bn Yuan, about one seventh of that in June. The central bank downplayed the drop, saying that the plunge in lending was a natural pull-back after an unusual surge in June, while conceding loan demand was slowing. Analysts said the unusually large drop may also have come on the back of a crackdown on high-risk loans and commodity financing in the wake of a fraud scandal at the port of Qingdao. But the dour news rattled some economists, who are worried that the numbers signaled not only weaker loan demand in the property sector but growing caution on the part of banks to lend in general as credit risks increase. The mood contrasted sharply with that of June, when data showed the economy appeared to be regaining traction after a weak start to the year. (Reuters)  China seen taking steps to aid growth after credit plunge – China’s plunge in credit expansion last month and unexpected slowdown in investment spending flashed warnings on growth that investors and economists bet will spur policy makers to expand stimulus. Chinese stocks closed higher yesterday on speculation that the government will take steps to support its 7.5% expansion target, after initially falling when the People’s Bank of China reported the lowest level for its broad financing measure since 2008. Barclays Plc is forecasting two second-half interest-rate cuts, while Australia & New Zealand Banking Group Ltd. said a reduction in the banks’ reserve requirements is imminent. A property slump and dangers from rising bad loans are making it tougher for Premier Li Keqiang to sustain the fastest growth in the Group of 20 nations. Any stimulus would build on measures this year to expedite railway spending, free up money for loans for small businesses and channel funds toward building low-income housing. (Bloomberg) Regional  PwC: Gulf IPO performance in 1H2014 points to market confidence – According to PricewaterhouseCoopers (PwC), the GCC witnessed seven IPOs in 2Q2014 as compared to two in 1Q2014. The total value of the seven IPOs in 2Q2014 stood at $902mn, a decrease of 5% as compared to 1Q2014, although this is a considerable increase as compared to 2Q2013, where a total of three IPOs raised $48mn. PwC said that during 1H2014, there were a total of nine IPOs raising $1.86bn, as compared to a total of five IPOs raising $385mn in 1H2013, an 80% increase in volume and 381% jump in value. Describing the IPO performance & activity in 1H2014 and the positive responses from investors as a testament to the recovery of confidence in the market by both issuers and investors, PwC said the outlook for IPOs in the GCC appears to be strong, especially toward the latter part of 2014 and 2015. PwC said the GCC debt capital markets (DCM) in 2014 had an active second quarter, particularly in corporate bonds and Sukuk, with large size deals that received a positive response from investors, which was demonstrated by the tight yields achieved. Noteworthy issuances include Commercial Bank issuing a $750mn bond, Bahrain’s Gulf International Bank ($533mn), UAE’s DP World ($1bn) and Etilsalat (one $500mn bond and two $1.6bn bonds). Moreover, on the sovereign front, Qatar Central Bank issued three government bonds. (  Malabar Gold & Diamonds plans major expansion in GCC – Global jewelry retailer, Malabar Gold & Diamonds has concluded a loan syndication transaction to raise AED300mn. The company intends to use the financing for its expansion plans, which includes opening 14 new retail stores across GCC and Singapore as well as consolidating its existing banking relationships into a common facility structure. NBF Capital acted as the financial adviser and bookrunner for the transaction. The syndication has a total of five banks participating with National Bank of Fujairah and Mashreq Bank serving as the mandated lead arrangers, Axis Bank as the lead arranger, Commercial Bank of Dubai and Habib Bank as the arrangers. (  S&P: Arab Mediterranean banks facing political turmoil – According to a report published by Standard & Poor's (S&P), banks in the Arab Mediterranean region will continue to encounter turbulent and challenging operating conditions in 2014-2015. The protracted regional political turmoil will hamper policy making & business confidence and delay economic recovery. S&P said its ratings on Arab Mediterranean banks
  5. 5. Page 5 of 7 have been dragged down since the end of 2010 by the deteriorating creditworthiness of their respective sovereigns, especially given the concentration of government paper that banks carry on their balance sheets. (  Savola starts preliminary talks on acquiring Kuwait’s Americana – Major Saudi food producer Savola Group (Savola) said it had begun preliminary talks on a potential acquisition of Kuwait Food Co (Americana), one of the Middle East’s largest food companies. Americana, with a $4.4bn market capitalization, is a franchise operator of restaurants including KFC and Pizza Hut, owned by Yum Brands, and Red Lobster and Olive Garden, owned by Darden Restaurants. The company also makes food products such as frozen vegetables. (  Saudi Gazette: Real estate funds worth SR25.5bn boost Saudi Arabia market – According to Saudi Gazette, citing a study by the Capital Market Authority (CMA), a total of 85 real estate funds with total assets valued at SR25.5bn were operating in Saudi Arabia by the end of 2013. All public real estate funds achieved a positive performance during 2014, with an average performance of 13.6%. (  KFCA signs contract worth $44mn – King Fahad Causeway Authority (KFCA) has signed a contract worth SR168mn for the operation, maintenance and complete testing of the causeway. The contract comprises operation, maintenance and full testing of the causeway over 26 kilometers from the toll gates on the Saudi Arabian side to the Bahraini side, facilities on the island and in the government procedures. (  BofA Merrill Lynch: Saudi Arabia economy to grow 4% in 2014 –Bank of America Merrill Lynch (BofA Merrill Lynch) said that the Saudi economy is forecasted to grow at 4% in 2014 as the real GDP growth will remain 3.8%. The moderate upside potential is premised on the expectations that the impact of the labor market reforms on the non-oil economy will start easing from 2H2014. On consumer dynamics, BofA Merrill Lynch said Saudi consumption growth has been among the strongest in the region over the past decade. The growth is expected to be at 6.6% YoY in 2014 and 8% by 2015, underpinned by a demographic window of opportunity as well as cyclical releveraging and structural developments. The Saudi economy appears to have weathered reasonably well the impact of the labor market reforms introduced last November. The real GDP expanded by 4.7% YoY in 1Q2014, down from an upwardly revised 5.0% YoY in 4Q2013. The robust oil expansion boosted the headline growth by 1.1ppt. Non-oil real GDP growth slowed down to 4.4% YoY, from 5.5% in 4Q2013. This was largely due to the non-oil private sector, which grew by 4.4% YoY, down from a pace of 6% in 2013. This was the slowest pace for over a decade. The growth in the government non-oil sector expanded further to 4.1% YoY. The slowdown was most visible in the wholesale, retail trade and construction sectors, which grew by 3.8% YoY and 5.6% YoY in 1Q2014, from 6.5% YoY and 9.9% YoY in 4Q2013 respectively. (  IATA: UAE carries 45.3mn passengers in 2013 – According to the International Air Transport Association (IATA), the UAE carried 45.3mn passengers in 2013, reflecting an 11.7% growth over 2013. The country is ranked top in terms of passengers carried in the Middle East, and second globally for YoY growth in passenger numbers in 2013. (  Kuwait CPI inflation steady in June at 2.9% – Kuwait’s inflation in consumer prices stood at 2.9% YoY in June 2014. The main sources of upward pressure on prices over the last year remained the clothing & footwear and furnishings & household maintenance sectors. Meanwhile foodstuffs and other goods & services have generally helped reduce inflation in consumer prices over last year. Housing rent has also been providing some downward pressure over the last nine months. Food price inflation eased further in June, slowing to 2.5% YoY, on a decline in prices during the month. Food price inflation has been trending lower since the start of the year when it stood at 4.2%. Two sectors that have been providing some increased upward pressure on inflation over the last year are education and restaurants & hotels, albeit from the low rates in 2013. (  KFH waits for regulatory approval on new CEO hire – Kuwait Finance House (KFH) is awaiting regulatory approval to hire Mazen al-Nahedh as its new Chief Executive Officer (CEO). Mazen served as head of consumer banking at National Bank of Kuwait (NBK). He has submitted his resignation and would leave the bank on October 21, 2014. (Reuters)  Sezad extends bid deadline for Duqm special zone – Special Economic Zone Authority Duqm (Sezad) announced that the date for submitting tenders for a consultancy service for building roads, infrastructure and buildings close to the berth area at Duqm port has been extended to September 2, 2014 from August 5, 2014. The scope of work for the winning international consultant includes assistance in preparing contract, evaluating bids, and examining detailed drawings and supervising work. The stipulated period for the construction work is thirty months. (  Batelco strengthens ties with Palo Alto Networks – Bahrain Telecommunication Company (Batelco) has strengthened its partnership with US-based network security company, Palo Alto Networks. The partnership is part of Batelco's ongoing efforts to expand its network of partners across the globe to be able to provide customers with the most advanced communications facilities and services as they become available internationally. (  ABC reports net profit of $137mn in 1H2014 – Arab Banking Corporation (ABC) recorded a net profit of $137mn in 1H2014, reflecting an increase of 22% as compared to $112mn in 1H2013. The bank’s net profit for 2Q2014 stood at $66mn, 18% higher than $56mn in 2Q2013. Total operating income for 2Q2014 amounted to $242mn on the back of growth in business volumes across all its geographies as compared to $210mn during 2Q2013. ABC Group's total assets registered a growth of 6% to $28.1bn as of June 30, 2014, reflecting growth in loan volumes and liquid assets, while customer deposits grew 8% in 1H2014 to $19.7bn from $18.3bn as of December 31, 2013. (Bahrain Bourse,  UGB reports 70% increase in 1H2014 net profit to reach $16.4mn – United Gulf Bank (UGB) reported a net profit of $16.4mn in 1H2014 as compared to $9.7mn in 1H2013, representing a 70% YoY increase. Net profit for 2Q2014 was up 95% to $6.2mn from $3.2mn in 2Q2013. The bank recorded a total income of $86.5mn in 1H2014 as against $37.6mn in 1H2013. EPS amounted to 2.01 US cents during 1H2014 as against 1.19 US cents during 1H2013. Total assets as of June 30, 2014 stood at $2.52bn as compared to $1.26bn as of December 31, 2013. Capital adequacy ratio was 15%, exceeding the minimum regulatory requirement of 12.5%. (Bahrain Bourse)  Riyadat signs MoU with Empower – Riyadat has entered into MoU with Empower Business Solutions and Consultancy (Empower). Riyadat operates a business incubator centre in A'ali for Bahraini female entrepreneurs, giving them space and resources to promote their business and sell their wares. Under the terms of the agreement, Empower will provide assistance to enterprises and other projects located at the center, through a
  6. 6. Page 6 of 7 user-friendly accounting and resource planning system. Riyadat is a joint venture between Bahrain Development Bank (BDB) and the Supreme Council for Women. (  Alubaf net profit soars 32% to $23.4mn in 1H2014 – Bahrain- based Alubaf Arab International Bank reported a 32% growth in its net profit at $23.4mn for 1H2014, as compared to $17.8mn for 1H2013. Net profit for 2Q2014 was $11.8mn as against $9.2mn for 2Q2013. The growth was mainly driven by the core business activities, with interest income increasing by 37% over 1H2013. Fee and commission income rose by 7%. The cost-to- income ratio remained stable at 21%, whereas the ratio of liquid assets to total assets was 39% and capital adequacy ratio remained strong at 43%. (
  7. 7. 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 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 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 7 of 7 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 0.0% 1.8% 0.2% (0.5%) 0.1% 0.3% (0.1%) (1.2%) (0.6%) 0.0% 0.6% 1.2% 1.8% 2.4% SaudiArabia Qatar Kuwait Bahrain Oman AbuDhabi Dubai Asset/Currency Performance Close ($) 1D% WTD% YTD% Global Indices Performance Close 1D% WTD% YTD% Gold/Ounce 1,312.90 0.3 0.1 8.9 DJ Industrial 16,651.80 0.6 0.6 0.5 Silver/Ounce 19.83 (0.5) (0.3) 1.8 S&P 500 1,946.72 0.7 0.8 5.3 Crude Oil (Brent)/Barrel (FM Future) 104.28 1.2 (0.7) (5.9) NASDAQ 100 4,434.13 1.0 1.4 6.2 Natural Gas (Henry Hub)/MMBtu 3.87 (1.2) (1.2) (10.9) STOXX 600 330.02 0.4 1.6 0.5 LPG Propane (Arab Gulf)/Ton 103.25 0.2 0.6 (18.4) DAX 9,198.88 1.4 2.1 (3.7) LPG Butane (Arab Gulf)/Ton 122.25 0.4 1.5 (9.9) FTSE 100 6,656.68 0.4 1.4 (1.4) Euro 1.34 (0.0) (0.3) (2.8) CAC 40 4,194.79 0.8 1.1 (2.4) Yen 102.42 0.2 0.4 (2.7) Nikkei 15,213.63 0.3 2.9 (6.6) GBP 1.67 (0.7) (0.5) 0.8 MSCI EM 1,070.87 0.6 2.4 6.8 CHF 1.10 0.0 (0.2) (1.6) SHANGHAI SE Composite 2,222.88 0.1 1.3 5.1 AUD 0.93 0.4 0.3 4.4 HANG SENG 24,890.34 0.8 2.3 6.8 USD Index 81.60 0.1 0.3 2.0 BSE SENSEX 25,918.95 0.1 2.3 22.4 RUB 35.99 (0.5) (0.5) 9.5 Bovespa 55,581.19 (1.5) 0.0 7.9 BRL 0.44 (0.3) 0.1 3.6 RTS 1,220.80 1.8 4.3 (15.4) 194.3 162.5 146.3