Page 1 of 8
QE Intra-Day Movement
Qatar Commentary
The QE index rose 0.6% to close at 13,173.3. Gains were led by the
Page 2 of 8
Qatar Market Commentary
 The QE index rose 0.6% to close at 13,173.3. The
Transportation and Telecoms indices...
Page 3 of 8
Global Economic Data
Date Market Source Indicator Period Actual Consensus Previous
07/16 US MBA MBA Mortgage A...
Page 4 of 8
1H2014. The list of properties traded in 1H2014 includes open
plots of land, two-floor villas, annexes, houses...
Page 5 of 8
 Litigation costs hit Bank of America's quarterly profit –
Bank of America Corp said its second-quarter profi...
Page 6 of 8
(Tadawul) on August 5, 2014 will be eligible for dividends. The
dividends will be distributed on August 8, 201...
Page 7 of 8
compared to KD6.26mn in 1H2013. EPS amounted to 6.40 fils
as compared to 3.19 fils a year earlier. (Bloomberg)...
Saugata Sarkar Abdullah Amin, CFA Shahan Keushgerian
Head of Research Senior Research Analyst Senior Research Ana...
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16 July Daily market report


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16 July Daily market report

  1. 1. Page 1 of 8 QE Intra-Day Movement Qatar Commentary The QE index rose 0.6% to close at 13,173.3. Gains were led by the Transportation and Telecoms indices, gaining 2.1% and 1.7%, respectively. Top gainers were Dlala Brokerage & Investments Holding Co. and Qatar General Insurance & Reinsurance Co., rising 7.6% and 4.6%, respectively. Among the top losers, Zad Holding Co. fell 2.7%, while Al Ahli Bank declined 1.7%. GCC Commentary Saudi Arabia: The TASI index rose 0.1% to close at 9,810.8. Gains were led by the Retail and Insurance indices, rising 1.2% and 0.6%, respectively. Al Hammadi gained 9.7%, while Aldrees Petro. & Tran. Services was up 6.4%. Dubai: The DFM index gained 1.9% to close at 4,858.3. The Inv. & Fin. Ser. index gained 4.8%, while the Banking index rose 1.9%. National Industries Group surged 12.9%, while Commercial Bank of Dubai was up 5.9%. Abu Dhabi: The ADX benchmark index rose 1.2% to close at 4,985.5. The Consumer index gained 4.1%, while the Energy index was up 2.3%. Int. Fish Farming surged 13.9%, while Umm Al-Qaiwain Cement Ind. Co. was up 9.6%. Kuwait: The KSE index gained 0.1% to close at 7,111.7. The Basic Material index rose 1.3%, while the Banking index was up 0.6%. Pearl of Kuwait Real Estate rose 12.1%, while Mubarrad Transport Co. was up 6.3% Oman: The MSM index rose 0.4% to close at 7,196.5. Gains were led by the Financial index rising 0.5%, while the Services index rose marginally. Financial Services gained 8.6%, while Al Madina Takaful was up 3.3%. Bahrain: The BHB index gained 0.9% to close at 1,484.1. The Investment index rose 2.2%, while the Commercial Banking index was up 0.7%. Arab Banking Corporation gained 5.4%, while Esterad Investment Co. was up 4.0%. Qatar Exchange Top Gainers Close* 1D% Vol. ‘000 YTD% Dlala Brokerage & Inv. Holding Co. 58.30 7.6 719.1 163.8 Qatar General Ins. & Reins. Co. 48.00 4.6 36.0 20.2 Doha Bank 61.40 4.2 502.1 5.5 Qatar Gas Transport Co. 23.95 3.7 2,348.4 18.3 Vodafone Qatar 20.10 3.4 3,484.5 87.7 Qatar Exchange Top Vol. Trades Close* 1D% Vol. ‘000 YTD% Vodafone Qatar 20.10 3.4 3,484.5 87.7 Barwa Real Estate Co. 43.10 0.8 3,337.8 44.6 Salam International Investment Co. 19.00 1.1 3,076.2 46.0 Qatar Gas Transport Co. 23.95 3.7 2,348.4 18.3 Masraf Al Rayan 55.10 1.1 2,250.1 76.0 Market Indicators 16 Jul 14 15 Jul 14 %Chg. Value Traded (QR mn) 1,008.8 569.0 77.3 Exch. Market Cap. (QR mn) 710,026.2 707,330.9 0.4 Volume (mn) 23.3 10.9 114.2 Number of Transactions 10,050 6,177 62.7 Companies Traded 43 40 7.5 Market Breadth 30:10 31:8 – Market Indices Close 1D% WTD% YTD% TTM P/E Total Return 19,647.92 0.6 2.0 32.5 N/A All Share Index 3,322.99 0.5 1.7 28.4 15.8 Banks 3,187.31 0.4 1.4 30.4 15.7 Industrials 4,346.22 (0.4) 0.6 24.2 17.0 Transportation 2,328.37 2.1 4.1 25.3 14.5 Real Estate 2,800.71 0.6 2.4 43.4 14.0 Insurance 3,816.28 1.1 7.2 63.4 9.5 Telecoms 1,675.86 1.7 1.5 15.3 23.1 Consumer 7,006.64 0.9 2.2 17.8 27.6 Al Rayan Islamic Index 4,399.71 0.6 1.7 44.9 19.0 GCC Top Gainers## Exchange Close# 1D% Vol. ‘000 YTD% Com. Bank Of Dubai Dubai 6.25 5.9 356.9 45.0 Dubai Financial Market Dubai 3.64 5.5 40,583.6 47.4 Arab Banking Corp Bahrain 0.78 5.4 20.0 108.0 Dubai Investments Dubai 3.60 5.0 75,983.8 54.7 Al-Qurain Petrochem. Kuwait 0.26 4.8 779.8 17.1 GCC Top Losers## Exchange Close# 1D% Vol. ‘000 YTD% Tabuk Cement Saudi Arabia 30.51 (4.2) 504.5 7.8 Qassim Cement Saudi Arabia 98.57 (3.8) 85.4 10.1 Saudi Pharmaceutical Saudi Arabia 46.18 (2.7) 512.1 8.7 Saudi Ceramic Saudi Arabia 136.54 (2.5) 296.4 22.5 RAKBANK Abu Dhabi 8.70 (2.1) 87.4 21.9 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. 80.00 (2.7) 1.0 15.1 Al Ahli Bank 52.10 (1.7) 6.0 23.1 Commercial Bank of Qatar 69.00 (1.4) 504.2 16.9 Qatari Investors Group 55.40 (1.2) 79.7 26.8 Qatar Islamic Insurance Co. 81.00 (1.2) 10.3 39.9 Qatar Exchange Top Val. Trades Close* 1D% Val. ‘000 YTD% Barwa Real Estate Co. 43.10 0.8 144,471.5 44.6 Masraf Al Rayan 55.10 1.1 124,924.6 76.0 QNB Group 178.00 0.1 75,741.1 3.5 Vodafone Qatar 20.10 3.4 69,135.8 87.7 Salam International Investment Co 19.00 1.1 58,440.0 46.0 Source: Bloomberg (* in QR) Regional Indices Close 1D% WTD% MTD% YTD% Exch. Val. Traded ($ mn) Exchange Mkt. Cap. ($ mn) P/E** P/B** Dividend Yield Qatar* 13,173.34 0.6 2.0 14.7 26.9 277.09 195,044.2 16.2 2.2 3.8 Dubai 4,858.29 1.9 6.2 23.2 44.2 768.23 92,985.8 26.1 1.9 2.1 Abu Dhabi 4,985.50 1.2 2.9 9.5 16.2 113.11 137,945.2 14.7 1.8 3.3 Saudi Arabia 9,810.81 0.1 0.1 3.1 14.9 1,630.76 534,349.6 19.5 2.4 2.9 Kuwait 7,111.66 0.1 0.5 2.0 (5.8) 52.84 111,685.7 16.9 1.1 3.9 Oman 7,196.52 0.4 0.1 2.7 5.3 17.52 26,507.1 12.3 1.7 3.9 Bahrain 1,484.12 0.9 3.0 4.0 18.8 3.28 54,366.5 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) 13,050 13,100 13,150 13,200 13,250 13,300 9:30 10:00 10:30 11:00 11:30 12:00 12:30 13:00
  2. 2. Page 2 of 8 Qatar Market Commentary  The QE index rose 0.6% to close at 13,173.3. The Transportation and Telecoms indices led the gains. The index rose on the back of buying support from non-Qatari shareholders despite selling pressure from Qatari shareholders.  Dlala Brokerage & Investments Holding Co. and Qatar General Insurance and Reinsurance Co. were the top gainers, rising 7.6% and 4.6%, respectively. Among the top losers, Zad Holding Co. fell 2.7%, while Al Ahli Bank declined 1.7%.  Volume of shares traded on Wednesday rose by 114.2% to 23.3mn from 10.9mn on Tuesday. Further, as compared to the 30-day moving average of 15.2mn, volume for the day was 54.0% higher. Vodafone Qatar and Barwa Real Estate Co. were the most active stocks, contributing 14.9% and 14.3% to the total volume respectively. Source: Qatar Exchange (* as a % of traded value) Ratings, Earnings and Global Economic Data Ratings Updates Company Agency Market Type* Old Rating New Rating Rating Change Outlook Outlook Change National Bank of Abu Dhabi (NBAD) CI Abu Dhabi FSR/LT FCR/ST FCR/SR A+/AA-/A1+/1 A+/AA-/A1+/1 – Stable – Bank Muscat S&P Oman LT CCR/ST CCR/SACP A-/A-2/bbb+ A-/A-2/a- – Stable – Source: News reports (* LT – Long Term, ST – Short Term, FSR- Financial Strength Rating, FCR – Foreign Credit Rating, LCR – Local Currency Rating, IDR – Issuer Default Rating, SR – Support Rating, LC – Local Currency, CCR – Counterparty Credit Ratings, SACP- Stand-alone Credit Profile) Earnings Releases Company Market Currency Revenue (mn)2Q2014 % Change YoY Operating Profit (mn) 2Q2014 % Change YoY Net Profit (mn) 2Q2014 % Change YoY Alinma Tokio Marine Co. (ATMC) Saudi SR 35.4 100.9% – – -10.0 NA Tabuk Agriculture Development Co. (TADCO) Saudi SR – – -1.3 NA 0.5 -79.8% Saudi Enaya Cooperative Insurance Co. (Enaya) Saudi SR 4.8 -85.3% – – -11.3 NA Takween Advanced Industries (Takween) Saudi SR – – 10.8 -19.4% 27.8 65.5% National Gas & Industrialization Co. (NGIC) Saudi SR – – 32.8 -12.8% 38.2 1.1% Saudi Printing & Packaging Co. (SPPC) Saudi SR – – 23.1 -24.5% 12.5 -38.1% Methanol Chemicals Co. (Chemanol) Saudi SR – – 21.8 124.4% 15.9 39550.0% The Co. for Cooperative Insurance Saudi SR 1,478.44 -2.8% – – 193.2 2753.7% Umm Al-Qura Cement Co. Saudi SR – – -11.7 NA -11.7 NA Saudi Steel Pipe Co. Saudi SR – – 19.9 -24.9% 15.6 -38.1% Arabian Cement Co. Saudi SR – – 212.9 78.3% 199.8 60.2% Mobile Telecommunications Co. Saudi Arabia (Zain) Saudi SR – – -136.0 NA -329.0 NA Saudi Arabia Refineries Co. Saudi SR – – 14.7 -1.0% 14.6 2.8% National Metal Manufacturing & Casting Co. Saudi SR – – 10.0 78.2% 8.8 108.5% Savola Group Saudi SR – – 694.4 7.1% 513.3 32.4% Saudi Kayan Petrochemical Co. Saudi SR – – 4.8 NA -133.1 NA Buruj Cooperative Insurance Co. (BCIC) Saudi SR 120.6 73.1% – – -0.2 NA City Cement Co. Saudi SR – – 65.2 -17.4% 62.2 -14.7% Insurance House Co. (IH)* Abu Dhabi AED 58.1 39.2% 3.6 NA 4.2 NA Manazel Holding Co.* Kuwait KD – – – – 1.7 -11.1% Mobile Telecommunications Co. (Zain Group) Kuwait KD 316.0 1.0% – – 59.0 -2.7% Oman Packaging Co. (OPC)* Oman OMR 6.3 -0.8% – – 0.1 -76.9% Al Batinah Dev. Inv. Holding (ABDIH)* Oman OMR 2.2 146.4% – – 0.8 1638.1% Oman Fiber Optic Co. (OFO)* Oman OMR 12.1 -17.8% – – 3.9 109.8% Source: Company data, DFM, ADX, MSM (*1H2014 results) Overall Activity Buy %* Sell %* Net (QR) Qatari 63.31% 70.54% (72,822,900.92) Non-Qatari 36.68% 29.47% 72,822,900.92
  3. 3. Page 3 of 8 Global Economic Data Date Market Source Indicator Period Actual Consensus Previous 07/16 US MBA MBA Mortgage Applications 11 July -3.60% – 1.90% 07/16 US BLS PPI Final Demand MoM June 0.40% 0.20% -0.20% 07/16 US BLS PPI Final Demand YoY June 1.90% 1.90% 2.00% 07/16 US US Treasury Total Net TIC Flows May $35.5B – $120.9B 07/16 US Federal Reserve Industrial Production MoM June 0.20% 0.30% 0.50% 07/16 US Federal Reserve Capacity Utilization June 79.10% 79.30% 79.10% 07/16 US Federal Reserve Manufacturing (SIC) Production June 0.10% 0.30% 0.40% 07/16 US NAHB NAHB Housing Market Index July 53.0 50.0 49.0 07/16 EU Eurostat Trade Balance SA May 15.3B 16.0B 15.2B 07/16 EU Eurostat Trade Balance NSA May 15.4B 16.5B 15.4B 07/16 UK ONS Claimant Count Rate June 3.10% 3.10% 3.20% 07/16 UK ONS Average Weekly Earnings 3M/YoY May 0.30% 0.50% 0.80% 07/16 UK ONS ILO Unemployment Rate 3Mths May 6.50% 6.50% 6.60% 07/16 UK ONS Employment Change 3M/3M May 254K 243K 345K 07/16 China NBS Fixed Assets Ex Rural YTD YoY June 17.30% 17.20% 17.20% 07/16 China NBS Retail Sales YTD YoY June 12.10% 12.20% 12.10% 07/16 China NBS Retail Sales YoY June 12.40% 12.50% 12.50% 07/16 China NBS Industrial Production YTD YoY June 8.80% 8.80% 8.70% 07/16 China NBS Industrial Production YoY June 9.20% 9.00% 8.80% 07/16 China NBS GDP YTD YoY 2Q2014 7.40% 7.40% 7.40% 07/16 China NBS GDP SA QoQ 2Q2014 2.00% 1.80% 1.50% 07/16 China NBS GDP YoY 2Q2014 7.50% 7.40% 7.40% Source: Bloomberg (s.a. = seasonally adjusted; n.s.a. = non-seasonally adjusted; w.d.a. = working day adjusted) News Qatar  DHBK 2Q2014 YoY profitability driven on the back of core banking income aided by investment income – DHBK reported a net profit of QR387.7mn, broadly inline with our estimate of QR384.3mn (BBG consensus: QR375.8mn and Reuters consensus: QR380.4mn). Net profit grew by 9.8% YoY (down 2.9% QoQ). The robust performance on a YoY basis was mainly attributed to core banking income complimented by investment income. DHBK posted a net interest income of QR490.1mn, increasing by 5.6% YoY (+1.0% QoQ). The bank’s annualized NIM continued to remain under pressure (3.0% in 2Q2014 vs. 3.09% in 1Q2014). Moreover fees and commissions surged by 35.1% YoY (+44.3% QoQ) reaching QR137.1mn. On the other hand, weak QoQ profitability was due to a surge in loan loss provisions (QR95.5mn in 2Q2014 vs. QR56.4mn in 1Q2014) coupled with an 18.6% rise in operating expenses (+17.1% YoY). Doha Bank’s loans and deposits grew by 10.2% (+4.4% QoQ) and 4.6% (+2.3% QoQ) YTD, respectively. Thus, Doha Bank’s LDR rested at 102% at the end of 2Q2014 vs. 100% at the end of 1Q2014 (97% at the end of 2013). On the other hand, the bank’s investment portfolio receded by 2.4% QoQ (down 16.1% YTD). (QNBFS, QE)  DBIS registers a strong YoY comeback with a net profit of QR33.7mn in 2Q2014 – Dlala Brokerage & Investments Holding Company (DBIS) reported a net profit of QR33.7 in 2Q2014 as compared to a net loss of QR39.2mn in 2Q2013. The Company’s EPS stood at QR1.52 in 2Q2014 vs. a loss of QR1.76 in 2Q2013. DBIS’ net brokerage & commission income rose to QR24.6mn in 2Q2014 compared to QR8.6mn in 2Q2013.The Company’s investment income also grew strongly to QR15.2mn in 2Q2014 as compared to QR3.0mn in 2Q2013.(QE)  MCGS posted a net profit of QR47.0mn in 2Q2014, up 124.1% YoY – Medicare Group (MCGS) reported a net profit of QR81.0mn in 1H2014 as compared to QR45.3mn in 1H2013. For 2Q2014, the company posted a net income of QR47.0mn representing a 124.1% YoY growth (+37.8% QoQ basis). MCGS’ EPS stood at QR2.88 as of June 30, 2014 vs. QR1.61 for the corresponding period in 2013. The company’s operating income grew 21.6% YoY to QR134.9mn in 2Q2014 (+13.5% QoQ basis). (QE)  UNCTAD: Qatar’s outward FDI increases to $8.02bn – Qatar’s outward foreign direct investment (FDI) flow surged to $8.02bn in 2013, accounting for 14% of the country’s gross fixed capital formation (GFCF) as compared to $1.8bn (3.4% of GFCF) in 2012. GFCF is a measure of the investment value of a country’s acquisitions of new or existing fixed assets. Separately, Qatar’s outward FDI stocks also jumped in 2013. According to United Nations Conference on Trade and Development (UNCTAD) World Investment Report 2014, the outward FDI stocks jumped to $28bn, as compared to $20bn recorded in 2012. But the inward FDI stocks dropped marginally to $29bn from $30bn.The inward FDI flows also shrank minus $840mn of GFCF as compared to 2012’s $327mn. (Peninsula Qatar)  ABank bond offers pick-up to parent CBQK – Turkey-based Alternatifbank (ABank) appeared to be offering a 45-55 basis point pick-up to majority owner Commercial Bank of Qatar (CBQK) when it set guidance for a new five-year note. The lender, rated A1/A-/A, set initial price thoughts of 160-170 bps over mid-swaps on a new Reg S only senior unsecured note with the deal size expected to be $250mn. CBQK owns a 74.25% stake in ABank. CBQK recently issued a 2.875%, 2019 note that was trading at a Z-spread of 109 bps around the time of announcement. A new five-year CBQ trade would price around Z+115 bps, suggesting that the pick-up on offer is around 45-55 bps. (Reuters)  Qatari real estate deals stood at QR25.43bn in 1H2014 – The real estate registration department at the Ministry of Justice registered transactions amounted to around QR25.43bn in
  4. 4. Page 4 of 8 1H2014. The list of properties traded in 1H2014 includes open plots of land, two-floor villas, annexes, houses, towers, residential buildings, complexes and shops. These are located in the municipalities of Umm Salal, Al Khor, Al Dhakira, Doha, Al Rayyan, Al Shamal, Al Daayen and Al Wakra. The total transactions in January amounted to QR4.75bn as compared to QR2.87bn in February, QR4.199bn in March, QR3.39bn in April, QR6.24bn in May, and QR3.96bn in June. (Bloomberg)  ORDS to pay interest to GMTN holders on August 18 & 21 – Ooredoo’s (ORDS) announced that its wholly-owned subsidiary Ooredoo International Finance (OIFL) will pay its Global Medium Term Note (GMTN) holders principal and interest payments on August 18, 2014 and August 21, 2014. (QE)  QA finalizes $18.9bn Boeing 777X plane deal – Boeing Company said that Qatar Airways (QA) has finalized an order for 50 777-9Xs wide-body jets, worth $18.9bn at current list prices. QA has also agreed to rights to buy 50 additional 777-9X jets. If the rights are exercised, QA’s 777X order would increase to 100 airplanes, valued at $37.7bn at list prices. According to Boeing, QA also plans to order four 777 Freighters with an option for four more, which will have a combined value of $2.4bn at list prices. (Reuters)  Healthcare providers under SAHA to double in next phase – The National Health Insurance Company’s (NHIC) Acting CEO Dr. Faleh Mohamed Hussein Ali has said that the number of clinics and hospitals that will provide services under the Social Health Insurance System (SAHA) will double in the next phase to 100 from the current 52. The healthcare providers include public and private hospitals, as well as medical complexes and clinics. Further, he revealed that more than 150,000 citizens had benefited within two months of the launch of the second phase of SAHA on April 30. Dr. Faleh warned against the manipulation of the system, which could be committed by some clinics or hospitals, such as giving drugs not needed by the patient, repetition of medical tests or treatment of a patient for diseases which are not included in the insurance coverage such as plastic surgery of the nose and recorded on grounds of the correction of a congenital defect. Dr. Faleh warned that clinics and hospitals are under the control of the National Health Insurance Company and the security authorities responsible for maintaining the State’s public funds. ( International  US factory output surges in second quarter, housing improving – US manufacturing output rose at its fastest pace in more than two years in the second quarter, suggesting the economy was regaining enough momentum to lift growth throughout the year. Recent data showed inflation stirring at the factory gate and the housing market getting back on track after its recovery stalled late last year. The Federal Reserve said factory production increased at a 6.7% annual rate, the quickest pace since the first quarter of 2012. That was a signficiant increase from the January-March period's tepid 1.4% pace. However, the manufacturing output increased only 0.1% in June after a 0.4 % gain in the prior month. But a strong performance in the second quarter coupled with a report on Tuesday that showed a surge in factory activities in New York state left economists confident the sector was on solid ground and would continue to support the overall economy. (Reuters)  Yellen says asset values are not out of line with past norms – Federal Reserve Chairman Janet Yellen said stock and bond valuations are not out of line with historical norms even as some prices seem on the “high side.” Yellen told lawmakers on the second day of the semi-annual testimony that Fed officials are watching for excessive risk-taking, mindful that holding interest rates low can prompt a “reach for yield.” She considers safeguarding financial stability a Fed mandate, reserved the right to aid failing broker-dealers and called a proposal to require the Fed to adopt a rule for monetary policy a “grave mistake.” Yellen said the threats to financial stability are at a moderate level and not at a high level. She further added that while “some pockets” show “stretched” valuations, traditional gauges “are not outside of historical norms” and there are no “alarming warning signals”across markets. The Fed chief said accommodation is necessary even if it may prompt investors to take on more risk. Yellen said she is “optimistic about the economy,” while answering questions on topics ranging from bank regulation and mortgage lending to auto sales & industrial output. (Bloomberg)  British pay growth slows to record low even as jobless rate falls – British workers' earnings grew at the slowest rate on record in the three months to May, one gauge showed, even as unemployment fell further, giving the Bank of England pause for thought as it prepares to start raising interest rates. Official data released on Wednesday showed earnings, excluding bonuses rose by an annual 0.7% in the three months through May. That was less than half the rate of inflation and the slowest growth in regular pay since records began in 2001, taking some of the shine off the economic recovery which Britain's ruling Conservative Party is hoping will help deliver success in next year's national elections. British government bond prices briefly rose and sterling fell on the weak earnings numbers, which could ease pressure on the BoE to raise interest rates later this year. (Reuters)  BRICS ink $50bn lender in World Bank, IMF challenge – Leaders of the five BRICS nations have agreed on the structure of a $50bn development bank by granting China its headquarters and India its first rotating presidency. Brazil, Russia and South Africa were given posts or units in the new bank. According to a statement issued at a summit in Fortaleza, Brazil the leaders also formalized the creation of a $100bn currency exchange reserve, which member states can tap in case of balance of payment crises. Both initiatives, which require legislative approval, are designed to provide an alternative to financing from the International Monetary Fund and the World Bank, where BRICS countries have been seeking more say. According to economists surveyed by Bloomberg, the measures coincide with a slowing of economic growth in the five countries to about 5.4% this year from 10.7% in 2007. According to an e-mailed statement, IMF Managing Director Christine Lagarde congratulated the BRICS on establishing the reserve arrangement and said the Washington-based lender would be “delighted” to work together on the international safety net designed to preserve financial stability. (Bloomberg)  China, Japan add treasuries on US yield advantage – China and Japan, the two largest foreign buyers of Treasuries, increased their holdings of the debt in May as US yields that were higher than those of Germany and most other large sovereign issuers boosted demand. The two countries, which held a total of $2.49tn of US government securities, or 21% of the $12.08tn of the publicly held debt, were the biggest overseas buyers of Treasuries for the month, with Japan purchasing $10.4bn and China $7.7bn. Total foreign holdings rose $15.1bn, the 10th consecutive monthly gain, the longest streak of purchases since January 2012 through March 2013. Overseas investors have boosted the pace of their purchases this year, increasing their stake in the debt by $174bn or 2.7% this year, to a record $5.98tn. That compares with $228.2bn for all of 2013, indicating a 4.1 % rise that was the smallest since 2006. (Bloomberg)
  5. 5. Page 5 of 8  Litigation costs hit Bank of America's quarterly profit – Bank of America Corp said its second-quarter profit fell 43%, a bigger decline than analysts had expected, after it posted $4bn of litigation expenses linked to mortgage disputes following the financial crisis. The expenses included a $650mn settlement with American International Group and money it set aside for an expected settlement with the Department of Justice. Bank of America has already agreed to pay $50bn to settle disagreements stemming from the market meltdown in 2008. The expenses far exceeded the $471mn in legal charges the bank posted in last year's second quarter, although it was less than the $6 billion it recorded in this year's first quarter. Higher legal costs overshadowed the increased profits that many of the bank's main businesses posted. Retail banking earnings, including credit cards, rose 28.5% to $1.79bn. Commercial and investment banking profit rose 4.3% to $13.5bn, thanks in part to a record quarter in underwriting equities. (Reuters) Regional  Naru Capital ties up with SABS Group for real estate deals in Riyadh – Naru Capital has signed a partnership deal with Saudi-based Salman Abdullah Bin Saedan Real Estate Group (SABS Group) to achieve higher returns in real estate deals in Riyadh. As a deal facilitator, Naru Capital has drawn upon its extensive contacts book of trusted investors to introduce an exciting Bin Saedan Real Estate Fund, and capitalize on the extraordinary returns available through its Private Real Estate Multi-Project Fund, worth SR170mn. (  Saudia carries 14mn passengers in 1H2014 – Saudi Arabian Airlines’ (Saudia) Acting Director General, Abdul Aziz Al-Hazmi, said that the airline carried more than 14mn passengers on 94,000 flights in 1H2014. The company achieved an on-time performance of 90.06% over the same period. There was a 11% increase in the number of passengers carried during the reporting period as it rose from 12.7mn to 14.1mn. The number of flights operated by the airline in 1H2014 jumped 8% from 87,389 to 94,069. Saudia ferried 7.84mn passengers between the Kingdom’s cities as against 7.41mn in 1H2013. The airline operated 59,404 domestic flights in the first half of 2014 with an on-time performance of 90.83%.The number of passengers grew by 5.8% in the domestic sector and number of flights grew 4% as compared to 1H2013. The domestic sector accounted for 67.89% of flights and 55.71% of passengers in 1H2014. On the international sector, Saudia carried 6.23mn passengers in 1H2014 as against 5.26mn in 1H2013, indicating an increase of 18.46% or 971,786 passengers. (  GASCO signs deal with JIPCO for purchase of 100 Mercedes-Benz trucks – The National Gas and Industrial Company (GASCO) has signed an agreement with the Juffali Industrial Products Company (JIPCO), the exclusive agent for Mercedes-Benz trucks in Saudi Arabia. Under the terms of the agreement, GASCO will acquire 100 Mercedes-Benz trucks. (  Flynas’ local market share rises to 15.9% – According to a statistical report released by King Khalid International Airport (KKIA), Flynas has transported 837,000 passengers onboard its local flights from KKIA in 1H2014, up 34% as compared to 624,000 passengers in 1H2013, representing a growth of 34%. The total market share of Flynas in the domestic aviation sector rose to 15.92%, as compared to 13.51% in 1H2013. In addition, the statistical data revealed that the number of passengers on local flights has reached 5.3mn in 1H2014 as compared to 4.6mn in 1H2013, reflecting an increase of 13.8%. (  SaudiGulf signs maintenance service agreement with IAE; taps V2500 engines for 4 aircrafts – Saudi Arabia-based SaudiGulf Airlines has selected the International Aero Engines (IAE) V2500 engine to power four A320ceo aircrafts and has signed an eight-year V-Services (SM) maintenance service agreement with IAE. SaudiGulf is planning to commence services in 2015. IAE is a multinational aero engine consortium whose shareholders comprise Pratt & Whitney, Pratt & Whitney Aero Engines International GmbH, Japanese Aero Engines Corporation and MTU Aero Engines. (  ECRA: Saudi Arabia nears completion of joint electricity projects – Saudi Electricity and Cogeneration Regulatory Authority’s (ECRA) Deputy Governor, Nasser Al-Qahtani, said that Saudi Arabia is nearing the completion of a number of joint electricity projects with other countries in the MENA region, as it seeks to boost sources for its domestic electricity consumption. A number of studies are currently being conducted to finalize projects linking Saudi Arabia’s electricity grid with countries in the region, including Turkey and Egypt. The tenders for contractors involved in the Saudi-Egyptian electricity grid project have been delayed until December 2014. The project will allow both Saudi and Egypt to generate and share an additional 3,000 megawatts of electricity during the peak hours via a 20 kilometer underwater cable crossing the Gulf of Aqaba. (  CDSI: Saudi Arabia June inflation unchanged at 2.7% – According to the Central Department of Statistics and Information (CDSI), Saudi Arabia's inflation rate remain unchanged at 2.7%, YoY, for the third consecutive month in June 2014. Foodstuffs, housing and related services remain the main sources of inflation despite a MoM decline in food prices, as core inflation stabilized for the second consecutive month in June. The CDSI estimate of core inflation, which excludes food & rent and other housing services, remained flat at 2.1% YoY for the second consecutive month in June. Core inflation was mainly driven by a seasonal increase in the home furniture segment during the summer months (4.9% YoY), which carries a 9.1% weight in the CPI basket. Foodstuffs, which account for 21.7% of the CPI basket, saw prices rise by 2.8% YoY in June, adding 0.67% to the headline figure. At this level, the food index recorded the lowest annual increase since April 2010. Rental inflation climbed back over 4% in June. The increase in this group is being driven by the rent component, which increased 4.6% YoY in June, as compared to 4.2% in May. Transport inflation remained in the negative territory. The CDSI expects inflation to gradually increase in 2H2014 as compared to 1H2014. (  Saudi oil exports hit 1.38bn barrels in 1H2014 – According to experts, Saudi Arabia exported nearly 1.38bn barrels of oil in 1H2014 that yielded SR565bn. The local consumption is projected to hit 395mn barrels, or 22% of the total production over the same period. (  SASCO to distribute SR33.75mn dividend for 1H2014 – Saudi Automotive Services Company (SASCO) has announced the distribution of 7.5% dividend (SR0.75 per share) amounting to SR33.75mn for 1H2014. The shareholders registered in the registers of the Securities Depository Center (Tadawul) on July 23, 2014 will be eligible for dividends. The dividend distribution date will be disclosed later. (Tadawul)  Jarir Marketing to distribute SR108mn dividend for 2Q2014 – Jarir Marketing Company’s board of directors (BoD) has recommended the distribution of 12% dividend (SR1.2 per share) amounting to SR108mn for 2Q2014. The shareholders registered in the registers of the Securities Depository Center
  6. 6. Page 6 of 8 (Tadawul) on August 5, 2014 will be eligible for dividends. The dividends will be distributed on August 8, 2014. (Tadawul)  Tadawul to be remain closed from July 25 on occasion of Eid Al Fitr – The Saudi Stock Exchange (Tadawul) will remained closed from July 25, 2014 on the occasion of Eid Al Fitr. Trading will resume on August 3, 2014. (Tadawul)  Savola Group to distribute SR266.99mn dividends for 2Q2014 – The Savola Group’s board of directors has approved the distribution of 5% dividends (SR0.50 per share) amounting to SR266.99mn for 2Q2014. The shareholders registered in the company books at the end of the trading day on July 23, 2014 will be eligible for dividends. The dividend payments will be processed as of August 11, 2014. (Tadawul)  Sipchem to distribute SR0.60 per share dividend for 1H2014 – Saudi International Petrochemical Company (Sipchem) announced that the National Commercial Bank (NCB) will distribute dividends to Sipchem shareholders for 1H2014 at rate of SR0.60 per share on July 17, 2014. The eligibility of dividends shall be for the shareholders registered in the registers of Sipchem in the Securities Depository Center (Tadawul) on July 6, 2014. (Tadawul)  Saudi CMA approves SVCIC’s capital reduction – Saudi CMA’s board of commissioners has approved the Saudi Venture Capital Investment Company’s (SVCIC) request to decrease its capital from SR375mn to SR251.25mn. (Tadawul)  Saudi CMA approves Rasmala Saudi’s cancellation of authorization – Saudi’s CMA board of commissioners has approved the Rasmala Investments Saudi Arabia Company’s (Rasmala Saudi) request to cancel the authorization to conduct the securities business of arranging and advising. (Tadawul)  Saudi CMA approves SGSAR’s business profile amendment – Saudi’s CMA board of commissioners has approved the Societe Generale Saudi Arabia’s (SGSAR) request to amend its business profile by cancelling its dealing as agent, managing investment fund, discretionary portfolio management, and custody. SGSAR is now authorized to conduct arranging and advising activities. (Tadawul)  Bank Aljazira reports net profit of SR166.7mn in 2Q2014 – Bank Aljazira reported a net profit of SR166.7mn in 2Q2014 as compared to SR167.4mn in 2Q2013. The net profit for 1H2014 reached SR326mn as compared to SR312mn in 1H2013, reflecting an increase of 4.5%. The bank’s total assets stood at SR65.8bn at the end of June 2014 as compared to SR56.3bn a year earlier. EPS amounted to SR0.82 as compared to SR0.78 a year earlier. Loans & advances stood at SR38.9bn, while customer deposits stood at SR51.8bn. (Tadawul)  Etihad chief aims to seal Alitalia deal as union warns on jobs – Etihad Airways’ CEO James Hogan said that a deal to acquire nearly half of Alitalia could be wrapped up this month but warned that cuts would be needed to make the loss-making carrier profitable, prompting opposition from Italy's largest union. Abu Dhabi's state-owned Etihad plans to buy 49% of the loss- making airline in a deal that Rome hopes will bring Alitalia the money it needs to invest in a new strategy focused on more lucrative long-haul routes. CEO James said that while all parties were focusing on concluding the negotiations by the end of this month, the deadline could be extended if needed. A final agreement has been held up by talks over thousands of job cuts and debt restructuring at Alitalia requested by Etihad as a condition for the deal. (Reuters)  ACC wins contract to build 81-storey tower in India – UAE- based Arabian Construction Company (ACC) has been awarded a contract by realty organization Brys Group to build an 81- storey tower in Noida, northern India. The project will be the second ACC will be undertaking in the territory and its fourth in India. (  Diagnos signs contract with Al Manama Medical Center – Canada-based healthcare technical services provider, Diagnos Inc. has signed a contract with Al Manama Medical Center for the deployment of a screening unit and usage of CARA in the UAE, a project fully supported by the UAE Ministry of Health. (Bloomberg)  Aabar in talks for 50% of Ex-CEO’s Arabtec stake – According to sources, Aabar Investments is engaged in talks to acquire at least half of a 28.9% stake in Arabtec Holding from former-CEO, Hasan Ismaik. Aabar is reportedly negotiating a price of AED5 to AED6 per share. At the top end of that range, half of Ismaik’s 1.27bn shares would be worth about $1.03bn. The transaction is likely to increase Aabar’s holding in Arabtec to more than 30%, making it the company’s largest shareholder. (Bloomberg)  DNIR appoints General Manager – Dubai National Insurance & Reinsurance Company (DNIR) has promoted Ramez Abou Zaid to the General Manager position of the company. (DFM)  DEWA awards Solar Innovation Center contract – Dubai Electricity and Water Authority (DEWA) has awarded the consultancy services to design and supervise the construction of its new project, Solar Innovation Center (SIC), to a US-based Ted Jacobs Engineering Group (TJEG). The SIC will be a main focal point for companies, researchers, university students, individuals working in the field of solar energy as well as for developers and manufacturers of clean-energy technologies. The center is expected to be completed by November 2015. (Bloomberg)  Dana Gas gets approval for AED7.3mn capital increase – The Competent Authorities have approved the increase of Dana Gas’ share capital by AED7.3mn arising out of the conversion of voluntary conversion notices that amounted to $1.5mn of convertible Sukuks. The company has submitted the required applications and documents to the Abu Dhabi Securities Exchange (ADX) to deliver the shares to the relevant Sukuk certificate holders. (  Aldar signs deal with Retail Arabia – Aldar Properties has signed a partnership agreement with Retail Arabia, a leading regional retail franchise owner for Yas Mall. The partnership includes a new concept House of Fraser department store spanning 110,000 square feet, the first Hamleys store in Abu Dhabi, as well as the first Joe Fresh store in the UAE. (  Gulf Capital to consider IPO – Private-equity firm Gulf Capital is considering an initial public offering (IPO) in what would be the UAE’s first listing of a buyout firm. The firm has hired advisors, including National Bank of Abu Dhabi to help arrange the sale on the Abu Dhabi stock exchange. (Bloomberg)  NBK 2Q2014 profit jumps 29% to KD60.9mn – National Bank of Kuwait (NBK) reported a net profit of KD60.9mn in 2Q2014 as compared to KD47.2mn in 2Q2013, reflecting an increase of 29%. The bank's net profit in 1H2014 also increased 12.6% to KD144.8mn from KD128.5mn in 1H2013. The bank's assets grew by 11.7% to KD20bn as on June 30, 2014 from a year earlier. Loans & advances rose 9.6% YoY and stood at KD11.3bn. (Reuters)  Boubyan Bank reports net profit of KD12.57mn in 1H2014 – Boubyan Bank reported net profit of KD12.57mn in 1H2014 as
  7. 7. Page 7 of 8 compared to KD6.26mn in 1H2013. EPS amounted to 6.40 fils as compared to 3.19 fils a year earlier. (Bloomberg)  OTI signs 1.05bn uncommitted borrowing base facility – Oman Trading International (OTI) has signed a $1.05bn uncommitted borrowing base facility. The facility will be used for meeting the company’s working capital needs and the refinancing of the previous $600mn club deal facility. The facility was launched at $800mn on April 11, 2014 and was substantially oversubscribed in syndication, enabling an increase of the facility size to $1.05bn, while still scaling back lenders’ participations. The facility has a tenor of 36 months from the closing date of July 3, 2014 and further diversifies OTI’s banking relationships. (  GPIC secures ISO certification – Gulf Petrochemical Industries Company (GPIC) has secured the ISO 17025:2005 quality standard certification. The certification relates to general requirements for efficiency testing laboratories, calibration by the International Service for Reliability based in the US and approval by the International Co-operation Agency of reliability laboratories. This is a proof that the company's laboratory operations match international standards in testing and examination of products to ensure compliance with the highest degree of health and safety. The certification is expected to remove technical obstacles to the commercial exchanges & sale of the company's products to various countries. GPIC was the first Bahraini oil & gas company to receive the ISO 17025:2005 certificate of reliability without the help of any external specialized expertise. (  CBB: Sukuk Al Ijara oversubscribed by 240% – The Central Bank of Bahrain (CBB) announced that the monthly issue of Sukuk Al Ijara short-term Islamic leasing bonds has received subscription to the tune of 240%. Subscriptions worth BHD48mn were received for the BHD20mn issue. The issue, carrying a maturity of 182 days, matures on January 15, 2015. The expected return on the issue is 0.80% as compared to 0.85% for the previous issue dated June 19, 2014. (  VIVA signs deal with Fakhro Group – VIVA Bahrain has entered into a partnership with the Fakhro Group to offer state- of-the-art IP PBX and unified information & communications technology (ICT) bundled solutions. An IP PBX is a private branch exchange (telephone switching system within an enterprise) that switches calls between VoIP (Voice over Internet Protocol or IP) users on local lines while allowing all users to share a certain number of external phone lines. (
  8. 8. Contacts Saugata Sarkar Abdullah Amin, CFA Shahan Keushgerian Head of Research Senior Research Analyst Senior Research Analyst Tel: (+974) 4476 6534 Tel: (+974) 4476 6569 Tel: (+974) 4476 6509 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 8 of 8 Rebased Performance Daily Index Performance Source: Bloomberg Source: Bloomberg Source: Bloomberg (*Market closed on 16 July 2014) 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 0.1% 0.6% 0.1% 0.9% 0.4% 1.2% 1.9% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% SaudiArabia Qatar Kuwait Bahrain Oman AbuDhabi Dubai Asset/Currency Performance Close ($) 1D% WTD% YTD% Global Indices Performance Close 1D% WTD% YTD% Gold/Ounce 1,299.20 0.4 (2.9) 7.8 DJ Industrial 17,138.20 0.5 1.1 3.4 Silver/Ounce 20.77 0.4 (3.2) 6.7 S&P 500 1,981.57 0.4 0.7 7.2 Crude Oil (Brent)/Barrel (FM Future) 105.85 (0.2) (0.8) (4.5) NASDAQ 100 4,425.97 0.2 0.2 6.0 Natural Gas (Henry Hub)/MMBtu 4.10 (0.3) 0.4 (5.6) STOXX 600 342.97 1.3 1.8 4.5 LPG Propane (Arab Gulf)/Ton* 103.75 0.0 0.4 (18.0) DAX 9,859.27 1.4 2.0 3.2 LPG Butane (Arab Gulf)/Ton 122.88 (0.1) (0.5) (9.5) FTSE 100 6,784.67 1.1 1.4 0.5 Euro 1.35 (0.3) (0.6) (1.6) CAC 40 4,369.06 1.5 1.2 1.7 Yen 101.67 (0.0) 0.4 (3.5) Nikkei 15,379.30 (0.1) 1.4 (5.6) GBP 1.71 (0.0) 0.1 3.5 MSCI EM 1,066.83 0.0 0.8 6.4 CHF 1.11 (0.3) (0.7) (0.6) SHANGHAI SE Composite 2,067.28 (0.1) 1.0 (2.3) AUD 0.94 (0.0) (0.3) 5.1 HANG SENG 23,523.28 0.3 1.2 0.9 USD Index 80.56 0.2 0.5 0.7 BSE SENSEX 25,549.72 1.3 2.1 20.7 RUB 34.41 0.1 0.6 4.7 Bovespa 55,717.36 (0.5) 1.7 8.2 BRL 0.45 (0.2) (0.1) 6.3 RTS 1,350.52 (0.1) (2.4) (6.4) 189.3 154.2 139.7