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QNBFS Daily Market Report July 31, 2018

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The QSE Index rose 0.2% to close at 9,651.8.

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QNBFS Daily Market Report July 31, 2018

  1. 1. Page 1 of 7 QSE Intra-Day Movement Qatar Commentary The QSE Index rose 0.2% to close at 9,651.8. Gains were led by the Transportation and Industrials indices, gaining 1.4% and 0.8%, respectively. Top gainers were Doha Insurance Group and Qatar National Cement Company, rising 4.0% and 3.5%, respectively. Among the top losers, Ooredoo fell 5.0%, while Dlala Brokerage & Investment Holding Company was down 2.9%. GCC Commentary Saudi Arabia: The TASI Index rose marginally to close at 8,309.4. Gains were led by the Insurance and Consumer Durables indices, rising 1.4% and 1.0%, respectively. AXA Cooperative Ins. Co. rose 10.0%, while Al Rajhi Co. for Coop. Ins. was up 9.8%. Dubai: The DFM General Index gained 0.8% to close at 2,965.5. The Inv. & Fin. Services index rose 1.4%, while the Transportation index gained 1.3%. Int. Financial Advisors rose 12.3%, while Almadina for Finance and Inv. was up 2.9%. Abu Dhabi: The ADX General Index rose 0.3% to close at 4,846.3. The Energy index gained 0.5%, while the Banks index rose 0.4%. National Bank of Ras Al-Khaimah gained 4.5%, while Ras Al Khaimah Cement Co. was up 3.9%. Kuwait: The Kuwait Main Market Index rose 0.5% to close at 4,943.6. The Technology index gained 6.2%, while the Insurance index rose 0.4%. Sanam Real Estate gained 9.8%, while Future Kid Entertainment and Real Estate was up 7.8%. Oman: The MSM 30 Index fell 0.4% to close at 4,320.5. Losses were led by the Industrial and Financial indices, falling 0.3% each. Voltamp Energy fell 5.2%, while Al Anwar Holding was down 2.8%. Bahrain: The BHB Index gained 0.1% to close at 1,370.5. The Hotels & Tourism index rose 2.1%, while the Investment index gained 0.3%. Gulf Hotel Group rose 3.0%, while Bahrain Commercial Facilities Co. was up 1.4%. QSE Top Gainers Close* 1D% Vol. ‘000 YTD% Doha Insurance Group 13.00 4.0 4.6 (7.1) Qatar National Cement Company 57.98 3.5 14.9 (7.8) Qatar Gas Transport Company Ltd. 16.90 2.9 2,073.6 5.0 Al Khaleej Takaful Insurance Co. 11.09 2.7 7.8 (16.2) Qatar Islamic Insurance Company 53.20 2.0 0.5 (3.2) QSE Top Volume Trades Close* 1D% Vol. ‘000 YTD% Qatar Gas Transport Company Ltd. 16.90 2.9 2,073.6 5.0 Vodafone Qatar 9.11 (1.5) 1,486.5 13.6 Al Khalij Commercial Bank 11.05 1.4 551.7 (22.2) Ezdan Holding Group 8.85 1.3 507.0 (26.7) QNB Group 166.00 0.7 381.8 31.7 Market Indicators 30 July 18 29 July 18 %Chg. Value Traded (QR mn) 241.6 190.6 26.8 Exch. Market Cap. (QR mn) 528,046.4 525,932.2 0.4 Volume (mn) 8.4 8.6 (1.6) Number of Transactions 3,407 2,683 27.0 Companies Traded 42 43 (2.3) Market Breadth 20:17 17:23 – Market Indices Close 1D% WTD% YTD% TTM P/E Total Return 17,005.35 0.2 0.5 19.0 14.3 All Share Index 2,792.65 0.4 0.9 13.9 14.5 Banks 3,393.76 0.5 0.6 26.5 13.5 Industrials 3,153.69 0.8 1.3 20.4 16.8 Transportation 2,010.15 1.4 2.4 13.7 12.6 Real Estate 1,689.57 0.6 3.5 (11.8) 14.4 Insurance 3,095.80 0.8 1.5 (11.0) 27.8 Telecoms 1,001.80 (3.6) (4.1) (8.8) 39.3 Consumer 6,293.80 (0.0) (0.7) 26.8 13.6 Al Rayan Islamic Index 3,831.17 (0.0) 0.1 12.0 15.5 GCC Top Gainers ## Exchange Close # 1D% Vol. ‘000 YTD% Al Ahli Bank of Kuwait Kuwait 0.33 5.8 141.7 13.8 Gulf Bank Kuwait 0.27 3.8 20,935.7 13.4 Comm. Bank of Kuwait Kuwait 0.52 3.8 1,183.4 43.0 Nat. Industrialization Co. Saudi Arabia 21.96 3.2 2,383.0 33.9 Qatar Gas Transport Co. Qatar 16.90 2.9 2,073.6 5.0 GCC Top Losers ## Exchange Close # 1D% Vol. ‘000 YTD% Dallah Healthcare Co. Saudi Arabia 74.10 (6.7) 268.2 (26.7) Ooredoo Qatar 69.57 (5.0) 240.3 (23.3) Human Soft Holding Co. Kuwait 3.50 (2.7) 5.7 (6.4) Oman Cement Co. Oman 0.37 (2.1) 7.0 (10.7) Saudi Cement Co. Saudi Arabia 46.30 (1.8) 36.0 (2.4) Source: Bloomberg (# in Local Currency) (## GCC Top gainers/losers derived from the S&P GCC Composite Large Mid Cap Index) QSE Top Losers Close* 1D% Vol. ‘000 YTD% Ooredoo 69.57 (5.0) 240.3 (23.3) Dlala Brokerage & Inv. Holding 14.03 (2.9) 115.9 (4.6) Medicare Group 70.06 (2.7) 17.5 0.3 Vodafone Qatar 9.11 (1.5) 1,486.5 13.6 Qatari Investors Group 30.72 (1.2) 11.3 (16.1) QSE Top Value Trades Close* 1D% Val. ‘000 YTD% QNB Group 166.00 0.7 63,127.1 31.7 Qatar Gas Transport Co. Ltd. 16.90 2.9 35,174.5 5.0 Ooredoo 69.57 (5.0) 16,734.8 (23.3) Industries Qatar 124.00 1.6 14,732.9 27.8 Vodafone Qatar 9.11 (1.5) 13,601.2 13.6 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* 9,651.77 0.2 0.5 7.0 13.2 66.24 145,054.3 14.3 1.5 4.6 Dubai 2,965.51 0.8 0.6 5.1 (12.0) 93.79 104,572.5 9.4 1.1 5.7 Abu Dhabi 4,846.25 0.3 0.0 6.3 10.2 35.75 132,369.6 12.6 1.4 5.0 Saudi Arabia 8,309.37 0.0 (0.7) (0.1) 15.0 1,040.39 526,862.4 17.8 1.9 3.3 Kuwait 4,943.60 0.5 (0.1) 1.6 2.4 104.45 34,145.0 15.7 0.9 4.0 Oman 4,320.46 (0.4) (0.4) (5.5) (15.3) 5.40 18,481.6 10.4 0.9 6.3 Bahrain 1,370.50 0.1 0.2 4.5 2.9 10.78 21,042.7 8.6 0.9 6.0 Source: Bloomberg, Qatar Stock Exchange, Tadawul, Muscat Securities Market and Dubai Financial Market (** TTM; * Value traded ($ mn) do not include special trades, if any) 9,560 9,580 9,600 9,620 9,640 9,660 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 QSE Index rose 0.2% to close at 9,651.8. The Transportation and Industrials indices led the gains. The index rose on the back of buying support from GCC and non-Qatari shareholders despite selling pressure from Qatari shareholders.  Doha Insurance Group and Qatar National Cement Company were the top gainers, rising 4.0% and 3.5%, respectively. Among the top losers, Ooredoo fell 5.0%, while Dlala Brokerage & Investment Holding Company was down 2.9%.  Volume of shares traded on Monday fell by 1.6% to 8.4mn from 8.6mn on Sunday. However, as compared to the 30-day moving average of 7.8mn, volume for the day was 7.9% higher. Qatar Gas Transport Company Limited and Vodafone Qatar were the most active stocks, contributing 24.6% and 17.7% to the total volume, respectively. Source: Qatar Stock Exchange (* as a % of traded value) Earnings Releases, Global Economic Data and Earnings Calendar Earnings Releases Company Market Currency Revenue (mn) 2Q2018 % Change YoY Operating Profit (mn) 2Q2018 % Change YoY Net Profit (mn) 2Q2018 % Change YoY Dar Alarkan Real Estate Development Co. Saudi Arabia SR – – 218.8 92.3% 108.6 892.7% Al Abdullatif Industrial Investment Co. Saudi Arabia SR – – 4.7 -72.0% 2.8 -79.1% Al Hammadi Company for Development and Investment Saudi Arabia SR – – 31.0 -8.4% 19.9 -22.3% Qassim Cement Co. Saudi Arabia SR – – 15.6 -68.1% 18.4 -65.5% National Gas and Industrialization Co. Saudi Arabia SR – – 25.4 -5.5% 31.8 -15.9% Najran Cement Co. Saudi Arabia SR – – -22.9 N/A -31.7 N/A Electrical Industries Co. Saudi Arabia SR – – 6.7 -61.4% 1.9 -82.3% Deyaar Development Dubai AED 137.6 -21.2% – – 25.2 -28.4% Union Insurance Company Abu Dhabi AED 255.7 -5.7% – – 4.9 -16.1% Arkan Building Materials Company Abu Dhabi AED 222.6 -3.8% – – 3.5 -75.4% Zain Bahrain Bahrain BHD 16.1 -13.9% 1.2 18.9% 1.2 29.1% SICO Bahrain BHD 3.1 26.6% – – 1.1 39.0% Source: Company data, DFM, ADX, MSM, TASI, BHB. Global Economic Data Date Market Source Indicator Period Actual Consensus Previous 07/30 EU European Commission Economic Confidence July 112.1 112.0 112.3 07/30 EU European Commission Consumer Confidence July -0.6 -0.6 -0.6 07/30 EU European Commission Industrial Confidence July 5.8 6.7 6.9 07/30 EU European Commission Services Confidence July 15.3 14.2 14.4 07/30 Germany German Federal Statistical Office CPI MoM July 0.3% 0.4% 0.1% 07/30 Germany German Federal Statistical Office CPI YoY July 2.0% 2.1% 2.1% Source: Bloomberg (s.a. = seasonally adjusted; n.s.a. = non-seasonally adjusted; w.d.a. = working day adjusted) Earnings Calendar Tickers Company Name Date of reporting 2Q2018 results No. of days remaining Status QGRI Qatar General Insurance & Reinsurance Company 31-Jul-18 0 Due SIIS Salam International Investment Limited 31-Jul-18 0 Due DOHI Doha Insurance Group 31-Jul-18 0 Due MCCS Mannai Corporation 2-Aug-18 2 Due GISS Gulf International Services 5-Aug-18 5 Due QCFS Qatar Cinema & Film Distribution Company 5-Aug-18 5 Due MPHC Mesaieed Petrochemical Holding Company 6-Aug-18 6 Due MCGS Medicare Group 6-Aug-18 6 Due Overall Activity Buy %* Sell %* Net (QR) Qatari Individuals 30.05% 48.89% (45,522,082.97) Qatari Institutions 13.27% 20.11% (16,520,194.35) Qatari 43.32% 69.00% (62,042,277.32) GCC Individuals 0.90% 0.88% 46,371.02 GCC Institutions 4.48% 3.30% 2,848,549.98 GCC 5.38% 4.18% 2,894,921.00 Non-Qatari Individuals 7.35% 9.37% (4,891,744.92) Non-Qatari Institutions 43.95% 17.44% 64,039,101.24 Non-Qatari 51.30% 26.81% 59,147,356.32
  3. 3. Page 3 of 7 IGRD Investment Holding Group 6-Aug-18 6 Due MERS Al Meera Consumer Goods Company 7-Aug-18 7 Due QGMD Qatari German Company for Medical Devices 8-Aug-18 8 Due IQCD Industries Qatar 8-Aug-18 8 Due ZHCD Zad Holding Company 9-Aug-18 9 Due MRDS Mazaya Qatar Real Estate Development 13-Aug-18 13 Due Source: QSE News Qatar  QNNS' net profit rises 20.2% YoY but declines 85.6% QoQ in 2Q2018 exacerbated by impairments; misses our estimate – Qatar Navigation's (QNNS) net profit rose 20.2% YoY to QR37.36mn in 2Q2018; however, on QoQ basis net profit declined 85.6%. Milaha recorded QR99.61mn in impairments of vessels and capital WIP and adjusting for this item, 2Q2018 would have been QR136.97mn, missing our estimate of QR204.43mn (variation of -33.0%). The company's operating revenue came in at QR555.87mn in 2Q2018, which represents an increase of 11.7% YoY. However, on QoQ basis operating revenue declined 20.3%. EPS amounted to QR2.62 in 1H2018 as compared to QR2.35 in 1H2017. In 1H2018, QNNS reported more than 11% increase YoY in net profit to QR297mn, powered by its maritime and logistics, offshore as well as capital units. The operating revenues grew 9% to QR1.25bn and operating profits jumped 51% to QR258mn. Milaha Maritime and Logistics’ revenue grew QR82mn and net profit by QR36mn on the back of higher volumes at Hamad Port and new shipping routes in the container shipping unit. Milaha Capital’s profits expanded QR138mn, largely due to improved returns from the financial investments portfolio. Although Milaha Gas and Petrochem’s operating profit increased QR5mn; vessel impairments drove overall net profit lower by QR145mn, according to the company’s spokesman. Milaha Offshore’s bottom line increased by QR9mn due to increase in vessel utilization rates and overall improvement in the offshore sector. However, the trading division saw net profit decline QR9mn owing to lower heavy equipment sales. (QNBFS Research, QSE, Gulf-Times.com)  QFLS’ net profit rises 2.8% YoY but declines 32.9% QoQ in 2Q2018 – Qatar Fuel Company’s (QFLS) net profit rose 2.8% YoY to QR202.04mn in 2Q2018; however, on QoQ basis net profit declined 32.9%. Revenue came in at QR5,637.81mn in 2Q2018, which represents an increase of 33.3% YoY (+10.6% QoQ). Decline in profits QoQ were driven by direct costs with gross margins shrinking from 7.1% in 2Q2017 and 6.1% in 1Q2018 to 4.5% in 2Q2018. EPS amounted to QR5.06 in 1H2018 as compared to QR3.75 in 1H2017. In 1H2018, QFLS reported QR503mn net profit (excluding minority rights), up 35% or QR130mn, compared to the QR373mn recorded in the same period in 2017. The increase in net profits in 1H2018 was attributed to the optimum utilization of company-owned infrastructure projects and means of logistic supports comprising vessels, storage tanks, tanker trucks, and other facilities, said Al Muhannadi, Woqod’s chairman, who further stressed that the efficient management of investments enabled the company to achieve significant growth in investment revenues. He noted that the operational costs and expenses were significantly reduced during the first half of 2018, resulting in additional income worth QR72mn. According to Al Muhannadi, sales ‎volumes grew for most of the products; the ‎average increase in the total sales volumes of petroleum products was 1.1% in comparison with the first half of 2017. He said jet fuel increased by 9.2%, bitumen (65.7%), LPG gas (13.6%), and sales ‎volumes for HFO increased by 100% as compared to same ‎period last year.‎ Retail sales volumes of petroleum products increased by 13.2%, while non-oil ‎retail revenue, including Sidra Stores grew by 7.2%. He also noted that Fahes ‎revenues increased by 15.6% compared to the first half of 2017.‎(QSE, Gulf-Times.com)  QFBQ reports net loss of QR325.23mn in 2Q2018 – Qatar First Bank (QFBQ) reported net loss of QR325.23mn in 2Q2018 as compared to QR67.11mn in 2Q2017 and QR28.64mn in 1Q2018. The increase in net loss was primarily attributable to loss on re- measurement of investments at fair value through income statement of QR290.71 in 2Q2018 vs. QR 20.77mn in 2Q2017. The company's total income came in at a loss of QR161.49mn as compared to an income of QR63.31mn in 2Q2017 and profits of QR92.37mn in 1Q2018. The company's revenue from non- banking activities came in at QR90.23mn in 2Q2018, which represents a decrease of 2.1% YoY. However, on QoQ basis revenue from non-banking activities rose 7.9%. QFBQ’s total assets stood at QR4.27bn at the end of June 30, 2018, down 24.4% YoY (-11.6% QoQ). Financing assets were QR1.35bn, registering a fell by 10.8% YoY (-8.2% QoQ) at the end of June 30, 2018. Financing liabilities rose 48.3% YoY and 11.9% QoQ to reach QR0.87bn at the end of June 30, 2018. Loss per share amounted to QR1.63 in 2Q2018 as compared to QR0.33 in 2Q2017 and QR0.14 in 1Q2018. QFBQ stated it will strengthen its expansion strategy and generate sound returns for stakeholders amid mixed signals in the regional economy. “We envision that regional economies will remain showing mix signals; however, we will continue to push ahead with our expansion strategy into banking and adopt an opportunistic outlook to source viable investment opportunities and generate sound returns for our clients and shareholders,” stated QFBQ, which, however, reported a net losses of QR354mn in the first six months of this year. The lender recorded unrealized losses associated with the value of its proprietary investment portfolio. These losses are mainly driven by Turkish assets and worsening macroeconomic conditions. However, in line with the bank’s new strategy, it is currently actively exploring avenues of exit to dispose some of its assets with the proceeds earmarked for the development and expansion of the bank’s new product offering. A bank spokesman said the cost rationalization plan, which started in 2016, was able to reduce staff and other operating costs by 34% and 17% YoY respectively during the first half of 2018. (QSE, Gulf- Times.com)
  4. 4. Page 4 of 7  QISI posts 34.8% YoY increase but 22.1% QoQ decline in net profit in 2Q2018 – Qatar Islamic Insurance Company's (QISI) net profit rose 34.8% YoY to QR18.0mn in 2Q2018. However, on QoQ basis net profit declined 22.1%. The company's gross income came in at QR29.11mn in 2Q2018, which represents an increase of 26.1% YoY. However, on QoQ basis gross income declined 8.1%. EPS amounted to QR2.74 in 1H2018 as compared to QR2.40 in 1H2017. In 1H2018, QISI reported net profit of QR41.12mn as compared to QR36.07mn for the same period of the previous year. (QSE)  AKHI's net profit declines 25.3% YoY and 66.9% QoQ in 2Q2018 – Al Khaleej Takaful Insurance Company's (AKHI) net profit declined 25.3% YoY (-66.9% QoQ) to QR1.93mn in 2Q2018.The company's total investment and other income came in at QR10.79mn in 2Q2018, which represents a decrease of 20.7% YoY (-25.7% QoQ). EPS amounted to QR0.08 in 2Q2018 as compared to QR0.1 in 2Q2017 and QR0.23 in 1Q2018. In 1H2018, AKHI reported profit of QR7.76mn as compared to QR16.45mn for the same period of the previous year. (QSE)  The Commercial Bank provides disclosure relating to National Bank of Oman discussion on the possible merger with Bank Dhofar – The Commercial Bank holds 34.9% of the shares in National Bank of Oman. The board of directors of National Bank of Oman in its meeting, which was held on July 29, 2018 resolved to commence discussion with Bank Dhofar to explore the possibility of a merger between the two entities, subject to obtaining final approvals from the respective boards, shareholders, stakeholders and regulators. (QSE)  Qatar’s industrial sector PPI jumps in June 2018 – The Ministry of Development Planning and Statistics (MDPS) released the monthly Producer Price Index (PPI) of the industrial sector for June 2018, with the base year 2013. Producer Price Index covers goods relating to mining (weight: 72.7%), manufacturing (weight: 26.8%), and electricity & water (weight: 0.5%). In the mining group, the PPI of June 2018, showed an increase of 3.6% when compared with PPI of May 2018, primarily due to the increase of prices of crude petroleum and natural gas with 3.6%. PPI of June 2018, when compared with the same period in the previous year, there has been a considerable increase of 41.1%. The overall index (PPI of industrial sector), the PPI for June 2018 is estimated at 70.4 points, showing an increase by 4.0%, when compared to the previous month, May 2018. On YoY basis, the PPI of June 2018 showed a rise of 35.6% when compared to the PPI of June 2017. (Gulf-Times.com)  Qatar’s hospitality sector scores significant growth in five years – Hospitality sector of Qatar has made great strides in the past five years. The total numbers of hotel rooms have increased by around 64% while the numbers of hotels have grown by about 30% during 2013 to 2017. The number of hotels increased from 83 in 2013 to 108 in 2017, while the number of rooms jumped from 13,577 to 22,288 rooms in the same duration, according to the Ministry of Development Planning and Statistics data. Biggest gain was seen the case of luxury hotels which witnessed largest expansion during the period. The number of luxury hotels jumped by 46% during the five- year period, registering the highest increase among the different category of hotels. There were 33 luxury hotels in 2013 which increased to 48 at the end of last year. The rooms in these hotels increased from 7634 in 2013 to 11,106 rooms at the end of last year, reflecting a substantial rise of around 45%. The number of four star hotels increased from 20 to 26 during the five-year period while the number of three star hotels grew from 21 to 27 hotels during the period. Qatar’s hospitality landscape has been dominated by five and four star hotels. Around 50% of hotel rooms in the country belonged to five-star hotels at the end of 2017. The dominance of luxury hotels is likely to continue in the near future. (Peninsula Qatar) International  US pending home sales rise, supply constraints remain – Contracts to buy previously owned homes unexpectedly rose in June after two straight monthly declines, but the housing market remains hobbled by a dearth of properties available for sale. The National Association of Realtors stated its Pending Home Sales Index, based on contracts signed last month, increased 0.9% to a reading of 106.9. Economists polled by Reuters had forecast pending home sales unchanged in June. House price increases are above 5% on an annual basis, far outpacing wage growth, which has been stuck below 3%, despite a robust labor market. The 30-year mortgage rate is around 4.54%, but still low by historical standards. Though the weakness in housing has been mostly driven by supply constraints, there are worries that it could spill over to the broader economy, through a reduction in purchases of household items like appliances and furniture. (Reuters)  Eurozone’s economic sentiment edges lower in July – Eurozone’s economic sentiment edged lower in July, pulled down by less optimism in industry and the retail sectors, despite a better mood in services, a monthly survey by European Commission showed. European Commission survey showed the economic sentiment indictor for the 19 countries sharing the Euro currency eased to 112.1 points in July from 112.3 in June, continuing a downward trend started since a peak of 115.2 last December. Separately, European Commission’s business climate indictor, which helps identify the phase of the business cycle, fell to 1.29 in July from 1.38 in June, following a similar downward path as economic sentiment since a peak of 1.63 in January. (Reuters)  German, Spanish inflation remain above ECB target in July – German and Spanish inflation remained slightly above European Central Bank’s (ECB) price stability target in July, preliminary data showed, supporting the ECB’s cautious approach of winding down its monetary stimulus only gradually. German consumer price inflation, harmonized to make it comparable with data from other European Union countries, remained at 2.1% YoY, the Federal Statistics Office stated. This was in line with a Reuters poll of analysts and above the ECB target of close to but below 2%. In Spain, Europe’s fourth-biggest economy, EU-harmonized consumer price inflation remained unchanged at 2.3% YoY in July, flash data from the National Statistics Institute in Madrid showed. (Reuters)  Japan’s June factory output falls 2.1% MoM – Japan’s industrial output fell 2.1% in June, government data showed, marking the second straight month of decline in a worrying sign as escalating global trade frictions cloud the outlook for the export-reliant economy. The fall was larger than a median
  5. 5. Page 5 of 7 market forecast for 0.4% decline and followed 0.2% fall in May. Manufacturers surveyed by the Ministry of Economy, Trade and Industry expect output to rise 2.7% in July and increase 3.8% in August, the data showed. (Reuters)  China's July manufacturing growth slows on trade dispute, softer domestic demand – Growth in China’s manufacturing sector slowed more than expected in July, as the worsening trade dispute with US, bad weather and weaker domestic demand weighed on factory activity. The official Purchasing Managers’ Index (PMI) released fell to 51.2 in July, from 51.5 in June and below the 51.3 in a Reuters poll of economists. It was also the lowest index reading since February but remained above the 50-point mark that separates growth from contraction for a 24th straight month. (Reuters)  China’s July official services PMI eases to 54.0 – Growth in China’s services industry in July moderated for the first time in five months, an official survey showed, a sign activity is slowing in a major part of the world’s second largest economy. The official non-manufacturing Purchasing Managers’ Index (PMI) fell to 54.0 from 55.0 in June, well above the 50-point mark that separates growth from contraction. The services sector accounts for more than half of China’s economy, with rising wages giving Chinese consumers more spending power. The composite PMI, which covers both manufacturing and services activity, fell to 53.6 in July, from June’s 54.4. (Reuters)  China tempts Britain with free trade, says door to US talks open – China offered Britain talks on a post-Brexit free trade deal, reaching out to London as China remains mired in an increasingly bitter trade war with US, even as a senior Chinese diplomat reiterated its door remained open for dialogue. Britain has pushed a strong message to Chinese companies that it is fully open for business as it prepares to leave the European Union next year, and China is one of the countries with which Britain would like to sign a post-Brexit free trade deal. (Reuters) Regional  OPEC’s oil output hits 2018 peak in July, but outages weigh – The Organization of the Petroleum Exporting Countries’ (OPEC) oil output has risen this month to a 2018 high as Gulf members pumped more after a deal to ease supply curbs and Congo Republic joined the group although losses from Iran and Libya limited the increase, according to Reuters’ survey. OPEC pumped 32.64mn barrels per day (bpd) in July, up 70,000 bpd from June’s revised level and the highest this year with Congo added. (Reuters)  ALAWWAL’s net profit narrows to SR253.6mn in 2Q2018 – Alawwal Bank (ALAWWAL) recorded net profit of SR253.6mn in 2Q2018 as compared to SR322.1mn in 2Q2017. Total operating income came in at SR877mn as compared to SR927.2mn in 2Q2017. Total assets stood at SR84.88bn at the end of June 30, 2018 as compared to SR101.63bn at the end of June 30, 2017. Loans and advances stood at SR59.13bn, while customer deposits stood at SR66.18bn at the end of June 30, 2018. EPS came in at SR0.47 in 1H2018 as compared to SR0.57 in 1H2017. (Tadawul)  Saudi Arabia’s Real Estate Price Index drops by 6.83% in 2Q2018 – The General Authority for Statistics revealed the Real Estate Price Index data for 2Q2018. The general index dropped by 6.83% in 2Q2018 compared to 2.84% in 1Q2018. Real Estate Price Index for 2Q2018 compared to 1Q2018 declined by 0.7%, due to changes in the prices of the three components of the sector which are residential, commercial and agricultural units. The residential items have dropped by 0.8% in 2Q2018 compared to 1Q2018. These include plots, villas, apartments, buildings and houses. Figures show that residential lands dropped by 0.9%, villas dropped by 1.7%, apartments by 0.6%, houses by 0.1% and buildings by 0.2%. The decline in the residential lands was 0.4% while only 0.1% dropped was documented for agricultural lands. A total of 65% of the lands in the Kingdom are residential while 31% is commercial and only 4% is agricultural. (GulfBase.com)  Saudi Arabian banks’ deposits shrink as government pulls back funds – Deposits at Saudi Arabian banks have shrunk as the government withdraws emergency funds injected when oil prices slumped, although weak loan demand makes a liquidity crunch unlikely. Eight of the top twelve Saudi Arabian banks reported lower deposits in their second-quarter earnings, released over the past couple of weeks. In 2016, the government placed deposits in the banking system to counter a shortage of funds due to low oil prices, which was pushing funding costs up sharply. Oil prices have now partially recovered and the central bank wants to avoid capital outflows by having Saudi Arabia’s interest rates rise in line with US rates. (Gulf-Times.com)  S&P affirms ‘Positive’ credit rating, outlook for Sharjah – The global credit ratings agency, Standard & Poor’s (S&P) reaffirmed the ‘Positive’ outlook of Sharjah’s economy, granting it ‘Stable’ sovereign credit rating of ‘BBB+’/’A-2’ in terms of local and foreign currencies respectively. The Emirate’s positive ratings are driven by its strong financial position and low-risk exposure, the agency stated. S&P also stated that it expected the Emirate’s economy to grow 2% between 2018 and 2021, and expected GDP growth to accelerate in 2018 based on the growth of business in the real estate and construction sectors and the positive impact on the Emirate due to Dubai’s preparations for hosting the high-profile exhibition, Expo 2020. (GulfBase.com)  DAFZA reduces free zone business set up fees by up to 65% – Dubai Airport Freezone Authority (DAFZA) reduced business setup cost by up to 65%, as part of its aim to increase DAFZA’s regional competitiveness and activate a number of key sectors by attracting foreign direct investment (FDI). DAFZA’s Director General, Mohammed Al Zarooni said, “This new approach falls in line with the directions of His Highness Sheikh Mohammed bin Rashid Al Maktoum to boost Dubai’s economic competitiveness. This is being done through a number of initiatives and incentives that aim to attract and promote FDI into the Emirate, ensuring sustainable growth across all economic sectors and strengthening Dubai’s status on the world economic stage.” (GulfBase.com)  Dubai registers 29% rise in winning event bids – Dubai Business Events (DBE) reported strong results for 1H2018, with 125 successful bids to host business events, reflecting a 29% increase over the same period last year. Conferences, meetings and incentive programs secured in 1H2018, including from bids submitted in previous years, are poised to attract over 65,000 delegates from around the world, resulting in an expected economic impact of approximately AED500mn, further
  6. 6. Page 6 of 7 cementing Dubai’s position as a leading global business events destination. (GulfBase.com)  CBI’s net profit rises to AED41.3mn in 2Q2018 – Commercial Bank International (CBI) recorded net profit of AED41.3mn in 2Q2018 as compared to AED31.8mn in 2Q2017. Total interest income and income from Islamic financing & investing assets came in at AED215.4mn as compared to AED211.8mn in 2Q2017. Net operating income came in at AED192.0mn as compared to AED202.4mn in 2Q2017. Total assets stood at AED20.67bn at the end of June 30, 2018 as compared to AED20.74bn at the end of December 31, 2017. Loans and advances to customers stood at AED12.23bn, while customers’ deposits stood at AED13.46bn at the end of June 30, 2018. Basic and diluted EPS from continuing operation came in at AED0.039 in 2Q2018 as compared to AED0.010 in 2Q2017. (ADX)  Abu Dhabi expands company license package to boost growth – The Abu Dhabi Department of Economic Development announced that it has expanded Tajer Abu Dhabi license package scheme by opening it up to all GCC nationals and UAE residents, in addition to increasing the number of commercial activities to more than 1,000. Tajer Abu Dhabi was originally launched late last year, allowing only Emiratis to establish businesses in 100 different business activities without the need of an office. The scheme has now been expanded to 1,057 commercial activities, with GCC nationals and UAE residents being allowed to start their business without having an office space or physical presence. (GulfBase.com)  KAMCO issues KD40mn bond with five-year tenure – KAMCO Investment Company issued a KD40mn, five-year tenure bond. The bond is comprised of two tranches: Fixed interest bonds with an interest rate of 6.00%, paid quarterly in arrears; and Floating interest bonds with an interest rate set at the discount rate declared by Central Bank of Kuwait plus 2.75% paid quarterly in arrears, capped at 7.00% per annum. (GulfBase.com)  Bahrain sells 91-day bills worth BHD70mn – Bahrain sold 91- day bills of worth BHD70mn due October 31. Investors offered to buy 1.01 times the amount of securities sold. The bills were sold at a price of 99.004, having a yield of 3.98% and will settle on August 1. (Bloomberg)  GFH fully settles $200mn Sukuk – Gulf Finance House (GFH) stated that it has fully settled its $200mn Sukuk, which was originally drawn in 2007. The facility, which was payable over several tranches with final maturity in July 2018, has now been settled with a recent payment of an outstanding amount of $34mn, the GFH stated. (GulfBase.com)
  7. 7. Contacts Saugata Sarkar, CFA, CAIA Shahan Keushgerian Zaid al-Nafoosi, CMT, CFTe Head of Research Senior Research Analyst Senior Research Analyst Tel: (+974) 4476 6534 Tel: (+974) 4476 6509 Tel: (+974) 4476 6535 saugata.sarkar@qnbfs.com.qa shahan.keushgerian@qnbfs.com.qa zaid.alnafoosi@qnbfs.com.qa QNB Financial Services Co. W.L.L. Contact Center: (+974) 4476 6666 PO Box 24025 Doha, Qatar Disclaimer and Copyright Notice: This publication has been prepared by QNB Financial Services Co. W.L.L. (“QNBFS”) a wholly-owned subsidiary of Qatar National Bank (Q.P.S.C.). QNBFS is regulated by the Qatar Financial Markets Authority and the Qatar Exchange. Qatar National Bank (Q.P.S.C.) 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. QNBFS accepts no liability whatsoever for any direct or indirect losses arising from use of this report. Any investment decision should depend on the individual circumstances of the investor and be based on specifically engaged investment 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. 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. For reports dealing with Technical Analysis, expressed opinions and/or recommendations may be different or contrary to the opinions/recommendations of QNBFS Fundamental Research as a result of depending solely on the historical technical data (price and volume). 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. This report may not be reproduced in whole or in part without permission from QNBFS. 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 (*$ adjusted returns) 40.0 60.0 80.0 100.0 120.0 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 QSEIndex S&P Pan Arab S&P GCC 0.0% 0.2% 0.5% 0.1% (0.4%) 0.3% 0.8% (0.5%) 0.0% 0.5% 1.0% SaudiArabia Qatar Kuwait Bahrain Oman AbuDhabi Dubai Asset/Currency Performance Close ($) 1D% WTD% YTD% Global Indices Performance Close 1D%* WTD%* YTD%* Gold/Ounce 1,221.42 (0.2) (0.2) (6.3) MSCI World Index 2,148.25 (0.4) (0.4) 2.1 Silver/Ounce 15.49 (0.0) (0.0) (8.6) DJ Industrial 25,306.83 (0.6) (0.6) 2.4 Crude Oil (Brent)/Barrel (FM Future) 74.97 0.9 0.9 12.1 S&P 500 2,802.60 (0.6) (0.6) 4.8 Crude Oil (WTI)/Barrel (FM Future) 70.13 2.1 2.1 16.1 NASDAQ 100 7,630.00 (1.4) (1.4) 10.5 Natural Gas (Henry Hub)/MMBtu 2.75 (1.1) (1.1) (22.3) STOXX 600 390.92 0.2 0.2 (2.1) LPG Propane (Arab Gulf)/Ton 97.50 0.8 0.8 (1.5) DAX 12,798.20 0.0 0.0 (3.4) LPG Butane (Arab Gulf)/Ton 107.75 1.9 1.9 (0.7) FTSE 100 7,700.85 0.2 0.2 (2.7) Euro 1.17 0.4 0.4 (2.5) CAC 40 5,491.22 0.1 0.1 0.7 Yen 111.04 (0.0) (0.0) (1.5) Nikkei 22,544.84 (0.8) (0.8) 0.5 GBP 1.31 0.2 0.2 (2.8) MSCI EM 1,090.14 (0.2) (0.2) (5.9) CHF 1.01 0.6 0.6 (1.4) SHANGHAI SE Composite 2,869.05 (0.2) (0.2) (17.2) AUD 0.74 0.1 0.1 (5.1) HANG SENG 28,733.13 (0.2) (0.2) (4.4) USD Index 94.35 (0.3) (0.3) 2.4 BSE SENSEX 37,494.40 0.4 0.4 2.4 RUB 62.26 (0.9) (0.9) 8.0 Bovespa 80,275.59 0.4 0.4 (6.8) BRL 0.27 (0.5) (0.5) (11.2) RTS 1,162.42 0.9 0.9 0.7 84.1 81.4 70.5

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