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QNBFS Daily Market Report October 29, 2018

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The QSE Index declined 0.1% to close at 10,144.4

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QNBFS Daily Market Report October 29, 2018

  1. 1. Page 1 of 8 QSE Intra-Day Movement Qatar Commentary The QSE Index declined 0.1% to close at 10,144.4. Losses were led by the Transportation and Telecoms indices, falling 0.9% and 0.5%, respectively. Top losers were The Commercial Bank and Qatar Navigation, falling 3.7% and 2.7%, respectively. Among the top gainers, Qatar National Cement Company gained 3.2%, while Qatari German Company for Medical Devices was up 3.0%. GCC Commentary Saudi Arabia: The TASI Index fell 0.4% to close at 7,802.7. Losses were led by the Banks and Pharma, Biotech. indices, falling 1.5% and 1.3%, respectively. Allied Cooperative Ins. declined 2.9%, while Swicorp Wabel REIT Fund was down 2.8%. Dubai: The DFM General Index declined 0.4% to close at 2,724.8. Consumer Staples and Discretionary index fell 2.0%, while the Real Estate & Const. index declined 1.2%. DXB Entertainments fell 2.2%, while Emaar Properties was down 2.0%. Abu Dhabi: The ADX General Index rose 0.3% to close at 4,897.6. The Banks index gained 0.6%, while the Investment & Financial Services index rose 0.5%. Reem Investments gained 15.0%, while Ras Al Khaimah Cement Co. was up 8.0%. Kuwait: The Kuwait Main Market Index rose marginally to close at 4,698.9. The Technology index gained 7.8%, while Real Estate index rose 0.5%. Sultan Center Food Products Co. gained 13.5%, while Tamdeen Real Estate Co. was up 8.4%. Oman: The MSM 30 Index rose marginally to close at 4,454.0. The Industrial index gained 0.1%, while the other indices ended in red. Raysut Cement rose 3.1%, while Al Madina Investment was up 2.6%. Bahrain: The BHB Index gained 0.3% to close at 1,318.9. The Commercial Banks index rose 0.5%, while the Investment index gained 0.3%. Khaleeji Commercial Bank rose 7.1%, while GFH Financial Group was up 1.5%. QSE Top Gainers Close* 1D% Vol. ‘000 YTD% Qatar National Cement Company 62.50 3.2 10.0 (0.6) Qatari German Co for Med. Devices 4.88 3.0 1.6 (24.5) Al Khaleej Takaful Insurance Co. 9.16 1.8 38.5 (30.8) Mesaieed Petrochemical Holding 17.17 1.5 108.7 36.4 Mannai Corporation 59.00 1.2 2.5 (0.8) QSE Top Volume Trades Close* 1D% Vol. ‘000 YTD% Mazaya Qatar Real Estate Dev. 7.46 (1.8) 437.7 (17.1) Qatar Gas Transport Company Ltd. 17.70 0.0 429.3 9.9 Investment Holding Group 5.38 0.6 310.1 (11.8) Vodafone Qatar 8.35 (0.6) 263.9 4.1 Qatar First Bank 4.41 0.5 238.1 (32.5) Market Indicators 28 Oct 18 25 Oct 18 %Chg. Value Traded (QR mn) 72.0 163.1 (55.8) Exch. Market Cap. (QR mn) 570,412.7 570,123.5 0.1 Volume (mn) 2.9 5.4 (46.6) Number of Transactions 1,711 3,163 (45.9) Companies Traded 41 42 (2.4) Market Breadth 19:17 17:21 – Market Indices Close 1D% WTD% YTD% TTM P/E Total Return 17,873.24 (0.1) (0.1) 25.0 15.0 All Share Index 2,994.52 (0.1) (0.1) 22.1 15.0 Banks 3,654.57 (0.3) (0.3) 36.3 13.7 Industrials 3,392.58 0.6 0.6 29.5 16.1 Transportation 2,143.33 (0.9) (0.9) 21.2 12.6 Real Estate 1,895.19 (0.1) (0.1) (1.1) 15.7 Insurance 3,069.67 (0.0) (0.0) (11.8) 18.7 Telecoms 943.20 (0.5) (0.5) (14.2) 36.0 Consumer 6,985.02 0.5 0.5 40.7 13.8 Al Rayan Islamic Index 3,877.34 0.3 0.3 13.3 15.2 GCC Top Gainers ## Exchange Close # 1D% Vol. ‘000 YTD% Middle East Healthcare Saudi Arabia 35.25 10.0 1,112.8 (34.6) Al Hammadi Dev. & Inv. Saudi Arabia 23.88 9.9 779.2 (35.6) Dallah Healthcare Co. Saudi Arabia 56.50 7.2 516.0 (44.1) Nat. Shipping Company. Saudi Arabia 33.35 5.2 3,260.6 5.9 F. A. Al Hokair Saudi Arabia 20.74 5.1 664.9 (31.8) GCC Top Losers ## Exchange Close # 1D% Vol. ‘000 YTD% The Commercial Bank Qatar 40.00 (3.7) 235.4 38.4 DP World Dubai 18.25 (3.7) 76.0 (27.0) Qurain Petrochemical Ind. Kuwait 0.39 (3.0) 739.3 19.8 Riyad Bank Saudi Arabia 17.02 (2.6) 1,060.3 36.2 Mouwasat Medical Serv. Saudi Arabia 75.10 (2.6) 135.1 (0.8) 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% The Commercial Bank 40.00 (3.7) 235.4 38.4 Qatar Navigation 73.00 (2.7) 26.3 30.5 Dlala Brokerage & Inv. Holding 10.46 (2.2) 3.9 (28.8) Mazaya Qatar Real Estate Dev. 7.46 (1.8) 437.7 (17.1) Alijarah Holding 8.50 (1.2) 30.0 (20.6) QSE Top Value Trades Close* 1D% Val. ‘000 YTD% The Commercial Bank 40.00 (3.7) 9,484.9 38.4 Qatar Gas Transport Company Ltd 17.70 0.0 7,599.1 9.9 Ooredoo 66.74 (0.4) 5,693.8 (26.5) Industries Qatar 140.85 1.0 5,608.5 45.2 QNB Group 188.02 0.0 5,282.7 49.2 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* 10,144.37 (0.1) (0.1) 3.4 19.0 19.70 156,692.4 15.0 1.5 4.3 Dubai 2,724.83 (0.4) (0.4) (3.9) (19.1) 47.30 97,952.9 7.3 1.0 6.5 Abu Dhabi 4,897.57 0.3 0.3 (0.8) 11.3 28.07 132,890.0 13.0 1.4 4.9 Saudi Arabia 7,802.65 (0.4) (0.4) (2.5) 8.0 793.80 496,548.7 16.1 1.7 3.6 Kuwait 4,698.87 0.0 0.0 (0.8) (2.7) 44.56 32,176.0 14.8 0.9 4.4 Oman 4,453.97 0.0 0.0 (2.0) (12.7) 3.30 19,218.0 10.2 0.8 6.1 Bahrain 1,318.87 0.3 0.3 (1.5) (1.0) 1.15 20,411.1 8.8 0.8 6.2 Source: Bloomberg, Qatar Stock Exchange, Tadawul, Muscat Securities Market and Dubai Financial Market (** TTM; * Value traded ($ mn) do not include special trades, if any) 10,120 10,140 10,160 10,180 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 QSE Index declined 0.1% to close at 10,144.4. The Transportation and Telecoms indices led the losses. The index fell on the back of selling pressure from Qatari and GCC shareholders despite buying support from non-Qatari shareholders.  The Commercial Bank and Qatar Navigation were the top losers, falling 3.7% and 2.7%, respectively. Among the top gainers, Qatar National Cement Company gained 3.2%, while Qatari German Company for Medical Devices was up 3.0%.  Volume of shares traded on Sunday fell by 46.6% to 2.9mn from 5.4mn on Thursday. Further, as compared to the 30-day moving average of 6.0mn, volume for the day was 51.7% lower. Mazaya Qatar Real Estate Development and Qatar Gas Transport Company Limited were the most active stocks, contributing 15.1% and 14.8% to the total volume, respectively. Source: Qatar Stock Exchange (* as a % of traded value) Earnings Releases and Earnings Calendar Earnings Releases Company Market Currency Revenue (mn) 3Q2018 % Change YoY Operating Profit (mn) 3Q2018 % Change YoY Net Profit (mn) 3Q2018 % Change YoY National Metal Manufacturing and Casting Co. Saudi Arabia SR 101.6 49.1% 2.4 3,900.0% -0.6 N/A Saudi Industrial Services Co. Saudi Arabia SR 149.3 21.1% 17.7 75.2% 11.1 94.7% Mouwasat Medical Services Co. Saudi Arabia SR 416.9 16.0% 90.5 5.4% 80.9 5.4% Saudi Research and Marketing Group Saudi Arabia SR 559.8 39.8% 56.1 72.6% 37.4 46.7% Southern Province Cement Co. Saudi Arabia SR 196.0 -9.3% 10.0 -82.5% 5.3 -90.7% Methanol Chemicals Co. Saudi Arabia SR 187.2 11.6% 35.9 1,810.1% 22.5 N/A Leejam Sports Co. Saudi Arabia SR 210.3 13.8% 61.0 25.6% 53.8 24.5% Al Hammadi Company for Development and Investment Saudi Arabia SR 250.4 53.6% 35.5 3.5% 21.3 -9.6% Saudi Basic Industries Corp.* Saudi Arabia SR 43.7 13.0% 10.0 17.2% 6.1 5.4% Basic Chemical Industries Co. Saudi Arabia SR 143.3 -0.6% 17.5 -6.9% 9.3 12.5% Saudi Public Transport Co. Saudi Arabia SR 464.8 20.6% 103.9 33.1% 95.3 50.6% AGTHIA Group Abu Dhabi AED 476.9 -4.4% 50.7 5.4% 49.5 6.5% RAK Properties Abu Dhabi AED 3.7 -93.6% -7.9 N/A -22.8 N/A Source: Company data, DFM, ADX, MSM, TASI, BHB. (*Values in Billions) Earnings Calendar Tickers Company Name Date of reporting 3Q2018 results No. of days remaining Status ORDS Ooredoo 29-Oct-18 0 Due MPHC Mesaieed Petrochemical Holding Company 29-Oct-18 0 Due QFBQ Qatar First Bank 29-Oct-18 0 Due SIIS Salam International Investment Limited 29-Oct-18 0 Due QGRI Qatar General Insurance & Reinsurance Company 29-Oct-18 0 Due DOHI Doha Insurance Group 29-Oct-18 0 Due ERES Ezdan Holding Group 29-Oct-18 0 Due ZHCD Zad Holding Company 30-Oct-18 1 Due QNNS Qatar Navigation (Milaha) 30-Oct-18 1 Due MCCS Mannai Corporation 30-Oct-18 1 Due Source: QSE Overall Activity Buy %* Sell %* Net (QR) Qatari Individuals 37.44% 30.77% 4,800,538.39 Qatari Institutions 13.69% 33.84% (14,518,680.69) Qatari 51.13% 64.61% (9,718,142.30) GCC Individuals 0.94% 0.32% 446,487.52 GCC Institutions 3.75% 4.94% (856,341.20) GCC 4.69% 5.26% (409,853.68) Non-Qatari Individuals 15.00% 16.92% (1,379,597.82) Non-Qatari Institutions 29.17% 13.20% 11,507,593.80 Non-Qatari 44.17% 30.12% 10,127,995.98
  3. 3. Page 3 of 8 News Qatar  QGTS posts 8.1% YoY increase but 6.0% QoQ decline in net profit in 3Q2018 missing our estimate; Maintain Outperform with a QR21 price target – Nakilat’s 3Q2018 net profit of QR214.1mn fell short of our estimate of QR238.3mn (variation of -10.2%). The wholly-owned LNG shipping business was bang in-line with our estimates with revenue of QR774.3mn (+0.5% YoY, +0.7% QoQ) vs. our estimate of QR777.3mn (divergence of -0.4%) and EBITDA of QR579.4mn (+1.4% YoY, +1.1% QoQ) vs. our estimate of QR580.0mn (difference of -0.1%). The miss vs. our estimates came from two sources, (1) a weaker-than- expected JV income number of QR101.4mn (+11% YoY, -5% QoQ) vs. our forecast of QR113.7mn (delta of -10.8%) and (2) higher-than-expected finance charges of QR305.5mn (+3.2% YoY, +4.6% QoQ) vs. our estimate of QR292.1mn (divergence of +4.6%). EPS amounted to QR1.19 in 9M2018 as compared to QR1.09 in 9M2017. Notwithstanding some quarterly variability, QGTS’ wholly-owned business remains steady and predictable. We continue to recommend an Outperform rating on the stock with a QR21 price target. In terms of catalysts, we believe expansion of Qatar’s LNG output from 77 MTPA to 100 MTPA is a significant driver (potentially another 30 conventional vessels). Also, QGTS is targeting FSRUs with one vessel already added to the fleet. We note that the company’s ships have 40- years of life vs. maximum debt life of 25 years (last debt maturing 2033), creating refinancing opportunities to increase fleet size. Medium-term, we believe the shipyard business could further improve. (QNBFS Research, Gulf-Times.com)  GISS' net profit declines 18.1% YoY and 78.9% QoQ in 3Q2018 and misses our estimate; stock is up 18% since our upgrade (Sep. 18) and has reached our price target of QR20 – GISS’ earnings of QR5.2mn in 3Q2018 fell short of our estimate of QR20.4mn. With no segment details provided, the miss came from lower GMs, higher finance charges and an impairment of QR8.5mn. The company's revenue came in at QR650.7mn in 3Q2018, which represents an increase of 4.9% YoY. However, on a QoQ basis, revenue fell 4.7%. Revenue was more in line with our estimate of QR672.5mn (delta of -3.3%). EPS amounted to QR0.21 in 9M2018 as compared to QR0.12 in 9M2017. According to a statement published by the company, in 9M2018, GISS’ net profit increased 77.8% YoY to QR 39.5mn, with the help of cost optimization and selective growth initiatives across verticals. The company stated the improvement realized in drilling was somewhat offset by lower profit in aviation. The group revenue of GISS - the holding entity of Gulf Drilling International, Gulf Helicopters, Al Koot and Amwaj - for 9M2018 was QR1.96bn, up 4.5% on the previous year. Revenue in the insurance segment improved significantly vs. last year primarily due to capturing of new business in the energy/general insurance segment, along with moving the underwriting of the medical business in-house. The drilling segment reported a slight growth in revenue due to increased rig deployments vs. last year. Revenue in the aviation segment was slightly up on last year, despite reduction in revenue from Qatar’s aviation operations, which was offset by the increase in the other revenue streams. Catering revenue was moderately down on last year. Project demobilization and reduced camps occupancy were the main reason for this reduction. The reduction was somewhat offset by other revenue streams. GISS’ quarterly results continue to remain fairly volatile especially given its razor-thin margins. Our previous call on GISS has worked very well and we will reassess our rating on the company after we speak to management. (QNBFS Research, Company financials, Gulf-Times.com)  BRES' net profit declines 10.0% YoY and 29.9% QoQ in 3Q2018 – Barwa Real Estate Company's (BRES) net profit declined 10.0% YoY (-29.9% QoQ) to QR279.5mn in 3Q2018. The company's rental income came in at QR320.9mn in 3Q2018, which represents an increase of 6.5% YoY. However, on QoQ basis, rental income declined 0.1%. EPS fell to QR0.71 in 3Q2018 from QR0.80 in 3Q2017 and QR1.03 in 2Q2018. In 9M2018, BRES posted net profit of QR1.08bn as compared to QR1.22bn in 9M2017. BRES ‘successfully enhanced’ its operating revenues by increasing rental income by QR70mn in 9M2018, which represents an increase of 7.7% compared to the same period in 2017. BRES stated it “aims to increase its operating revenues by improving the efficiency of existing operational projects, in addition to supporting its operational real estate portfolio through new projects.” During the period, BRES stated that it completed the construction work of the second phase of Madinat Al Mawater project and the Barwa Village extension project. This is in addition to finalizing the development work of the ‘affordable housing’ project for laborers at Salwa Road, Dara A project and the ongoing development work of the other projects such as the Warehouses Project of Barwa Al Baraha and Al Khor Recreation Extension project. BRES added it “continues to study its available land bank in order to identify the optimal utilization, thus helping to support the development of sustainable revenues, where it is expected to award the construction contracts of Phase Three of Barwa Al Baraha project and the Phase Three of Madinat Al Mawater project before the end of the year.” BRES stated it is “also keen on enhancing the partnership with the Government to create real estate development projects that contribute to meet the needs of citizens and residents in order to fulfill the role of the Group as the largest real estate developer in the country.” (QSE, Gulf- Times.com, Peninsula Qatar)  MERS' net profit declines 18.3% YoY and 43.8% QoQ in 3Q2018 – Al Meera Consumer Goods Company's (MERS) net profit declined 18.3% YoY (-43.8% QoQ) to QR28.1mn in 3Q2018. The company's sales came in at QR691.0mn in 3Q2018, which represents an increase of 1.4% YoY. However, on QoQ basis, sales fell 16.6%. EPS amounted to QR6.07 in 9M2018 as compared to QR6.84 in 9M2017. (QSE, Gulf-Times.com)  IGRD's net profit declines 13.1% YoY and 7.2% QoQ in 3Q2018 – Investment Holding Group’s (IGRD) net profit declined 13.1% YoY (-7.2% QoQ) to QR8.2mn in 3Q2018. In 9M2018, IGRD reported net profit of QR31.6mn as compared to QR30.5mn in 9M2017. EPS amounted to QR0.38 in 9M2018 as compared to QR0.37 in 9M2017. (QSE)  AKHI posts YoY surge but 32.8% QoQ decline in net profit in 3Q2018 – Al Khaleej Takaful Insurance Company's (AKHI) net profit surged YoY (but declined 32.8% on QoQ basis) to QR1.3mn in 3Q2018.The company's total investment and other
  4. 4. Page 4 of 8 income came in at QR8.9mn in 3Q2018, which represents an increase of 8.8% YoY. However, on QoQ basis, total investment and other income fell 17.8%. EPS amounted to QR0.05 in 3Q2018 as compared to QR0.01 in 3Q2017 and QR0.08 in 2Q2018. (QSE)  QGMD reports net loss of QR1.1mn in 3Q2018 – Qatari German Company for Medical Devices (QGMD) reported net loss of QR1.1mn in 3Q2018 as compared to net loss of QR2.0mn in 3Q2017 and QR2.2mn in 2Q2018. The company’s revenue came in at QR3.7mn in 3Q2018, which represents an increase of 88.7% YoY (+44.8% on QoQ basis). In 9M2018, QGMD reported net loss of QR5.5mn as compared to QR6.3mn in 9M2017. Loss per share amounted to QR0.48 in 9M2018 as compared to QR0.55 in 9M2017. (QSE)  AHCS' net profit declines 4.5% YoY and 4.9% QoQ in 3Q2018 – Aamal Company's (AHCS) net profit declined 4.5% YoY (-4.9% QoQ) to QR107.4mn in 3Q2018. The company's revenue came in at QR300.4mn in 3Q2018, which represents an increase of 9.2% YoY. However, on QoQ basis, revenue fell 12.8%. In 9M2018, AHCS reported net profit of QR336.3mn as compared to QR352.9mn in 9M2017. EPS amounted to QR0.53 in 9M2018 as compared to QR0.56 in 9M2017. (QSE)  QOIS reports net loss of QR0.275mn in 3Q2018 – Qatar Oman Investment Company (QOIS) reported net loss of QR0.275mn in 3Q2018 as compared to net profit of QR0.004mn in 3Q2017 and net profit of QR0.039mn in 2Q2018. The company's net investment and interest income came in at QR0.917mn in 3Q2018, which represents a decrease of 16.8% YoY (-26.0% QoQ). EPS amounted to QR0.164 in 9M2018 as compared to QR0.335 in 9M2017. (QSE)  QNB Group set to finance 65% of Qamco IPO subscriptions of its Qatari customers – QNB Group will finance subscriptions to the QR2.73bn Initial Public Offering (IPO) of Qatar Aluminium Manufacturing Company (Qamco). “The bank will finance 65% of the total value of shares that Qatari QNB Group customers wish to purchase, with the capability of providing them at zero percent interest, until the surplus shares are allocated,” its spokesman said. The lender offers a simple subscription process by visiting the website qnb.com/ipo, downloading the form, filling it out, signing it, and sending it to the bank along with the required documents. After registering online, customers can easily subscribe to the IPO online or through SMS anytime. QNB Group is working to provide innovative ways to enable customers to register on all IPOs either for themselves or on behalf of their relatives and children. (Gulf-Times.com)  QIIK to finance subscription to Qamco IPO shares – Qatar International Islamic Bank (QIIK) will be ‘financing the subscriptions’ to the Initial Public Offering (IPO) of Qatar Aluminium Manufacturing Company (Qamco), which starts on October 30 and continues until November 12. QIIK stated it has made all the required logistic arrangements to “welcome subscribers” in the branches that are participating in the Qamco IPO subscription. QIIK’s Deputy CEO, Jamal Al-Jamal said, “We are delighted to participate in all activities, which add value to the national economy. No doubt that the subscription in Qamco shares clearly reflects the dynamic state of the Qatari economy, which is able to provide development opportunities and engage the largest possible number of citizens in the success and evolution of the Qatari economy”. He said QIIK is participating in the IPO subscription to Qamco shares by financing prospective subscribers and welcoming them at 15 dedicated branches covering all the regions in the country with flexible subscription hours, in the morning and evening as well as at the weekend. Al-Jamal noted, “QIIK provides the subscribers with 65% financing of the subscribed shares.” As for IPO applicants whose salaries are not transferred to QIIK, the limit of subscription finance has been set from 7,000 shares to an upper limit of 50,000 shares. However, there is no limit for QIIK customers, whose salaries have been transferred to the bank. (Gulf-Times.com)  QP to allocate 750 free Qamco shares to registered Qatari beneficiaries – Qatar Petroleum (QP) stated it will allocate 750 free shares in Qatar Aluminium Manufacturing Company (Qamco) under incorporation to all registered Qatari beneficiaries covered by the social security law. The beneficiaries stipulated by the law include the elderly, those unable to work, orphans, needy families, the disabled, divorced women, widows, prisoners’ families and other categories. In addition to the free Qamco shares, members of the entitled groups can subscribe to an additional number of shares if they wish, and pay the due share price in accordance with the offering memorandum. The details of the free share allocation will be finalized in consultation with the various concerned entities, QP stated. (Gulf-Times.com)  Qatar’s inward foreign investments rise 5% YoY to QR682.3bn in 2Q2018 – The ongoing diplomatic and trade embargo notwithstanding, overseas investors appear to be bullish on Qatar’s macro fundamentals, as Qatar’s inward foreign investments reported a 5% YoY gain to QR682.3bn in 2Q2018, according to official estimates. At the end of 2Q2018, Qatar’s outward foreign investments amounted to QR387.3bn, which reported about 16% decline, according to the figures released by the Ministry of Development Planning and Statistics (MDPS). Of the total QR682.3bn inward foreign investments, as much as 66%, or QR453.4bn, were foreign other investments; 18% or QR125.5bn were from foreign direct investments; 15% or QR100.7bn from foreign portfolio investments and the remaining 1% or QR2.8bn from financial derivatives, MDPS stated in its foreign investment survey. The objective of this survey, conducted in collaboration with the Qatar Central Bank, was to cover major enterprises operating in the national economy. (Gulf-Times.com)  Qatari Diar Real Estate Company completes Citi Tower infrastructure project in Malaysia – Qatari Diar Real Estate Company announced the completion of the infrastructure and parking phase of the Citi Tower project in Malaysia’s capital, Kuala Lumpur. The announcement was made within the framework of the visit paid by a delegation from Qatari Diar, headed by CEO Abdullah bin Hamad Al Attiyah, to Malaysia to review the latest developments in the project, which cost a total of QR5.6bn. (Peninsula Qatar)  Middle East’s Economic Future Conference 2018 set to open tomorrow – The 13th Enriching the Middle East’s Economic Future Conference 2018, will kick off in Doha tomorrow with a wide local and foreign participation. The two-day event is organized by the Permanent Committee for Organizing
  5. 5. Page 5 of 8 Conferences at the Ministry of Foreign Affairs, in cooperation with the Center for Middle East Development (CMED) of the University of California-Los Angeles. As every year, the Enriching Middle East Economic Future Conference will offer a wide ranging overview of the key issues in the region and around the world, bringing together a distinguished elite of eminent economists, experts, researchers, academics, business men and decision makers from all over the world to express their views and exchange ideas and insights on the future prospects of the Middle East and the Mediterranean region in the economic field. (Peninsula Qatar)  Prime Minister to open Milipol Qatar 2018 today – Under the patronage of Amir HH Sheikh Tamim bin Hamad Al Thani, Milipol Qatar 2018 is all set to kick off its 12th edition today at Doha Exhibition and Convention Center (DECC) with the participation of 219 exhibitors from 24 countries around the world. The three-day show which will be inaugurated by Prime Minister and Interior Minister, HE Sheikh Abdullah bin Nasser bin Khalifa Al Thani, has already attracted leading industry players from across the globe, which will showcase their latest innovations in the world of safety and security. The leading international exhibition, dedicated to homeland security and Civil Defense in the Middle East region 2018, will set the agenda for internal security and public safety with leading international specialists bringing new products and solutions, across a range of industries. (Peninsula Qatar) International  Philip Hammond warns Brexit rebels not to risk easing of austerity – British Finance Minister Philip Hammond warned rebels in his Conservative Party that he would have to quickly reverse plans to ease nearly a decade of austerity if London fails to get a Brexit deal. Hammond, who is due to announce an annual budget plan, said he would be able to show voters that “their hard work has paid off” as long as Britain achieves a smooth exit from the European Union (EU) in five months’ time. Hammond has angered many members of his Conservative Party by arguing Britain should remain close to the EU after Brexit and Prime Minister Theresa May has so far failed to bridge the divide in her party. Many investors and businesses are worried that the chance of a no-deal Brexit is growing. Hammond said he was confident that London and Brussels would settle their differences but “if we don’t get a deal, we would need to take a different approach to the future of Britain’s economy.” (Reuters)  French Finance Minister: Eurozone not prepared enough to face new crisis – There is no risk of contagion from Italy’s budget crisis in the European Union, but the Eurozone is not prepared enough to face a new economic crisis, French Finance Minister Bruno Le Maire said. The European Commission rejected Italy’s draft 2019 budget earlier, for breaking EU rules on public spending, and asked Rome to submit a new one within three weeks or face disciplinary action. Eurozone officials have said that Rome’s unprecedented standoff with Brussels seems certain to delay the reform process and probably dilute it for good. Le Maire also said French banks with branches in Italy had issued corporate and household loans totaling €280bn ($319bn). “This sum is manageable but substantial,” he said. (Reuters)  Japan’s retail sales growth slows, likely a drag on third-quarter GDP – Japan’s retail sales rose for an 11th consecutive month in September from a year earlier, but the pace of gains slowed from the prior month, in a sign private consumption may not be strong enough to avoid a wider slowdown in economic growth. The trade ministry’s figures followed data that showed an unexpected drop in exports in September, raising the specter of a marked moderation in economic growth in July-September from the previous quarter’s solid expansion. Analysts expect the third-quarter slowdown to be temporary, caused by a string of natural disasters that disrupted business and consumer activity in recent months. But the softer growth will add to wider concerns about the Japanese central bank’s ability to hit its elusive annual inflation target of 2%. The Bank of Japan (BoJ) will examine the data and coming indicators such as factory output and jobless figures at its board meeting this week, when it updates its growth and inflation projections. The data feeds into calculations for GDP for July-September, which is due to be out on November 14. September’s 2.1% annual increase in retail sales beat the Reuters poll median forecast of 1.6%, trade ministry data showed, but it was slower than the 2.7% expansion in August. (Reuters) Regional  OPEC moves from ‘pump all you can’ to mulling output cuts in just days – OPEC has signaled it could cut output in 2019 due to concerns about rising oil inventories and economic uncertainty, lurching away from a pledge made just days ago to pump flat out. The group’s vacillations came as the sizeable crude price gains of September vanished in an October rout. If the group follows through, it could change the outlook of the oil market and reignite the ire of US President, Donald Trump, who has repeatedly demanded that OPEC keep prices low. A committee of producers including Russia and Saudi Arabia highlighted the need to prepare ‘options’ for how much oil they should pump next year to prevent the market slipping back into imbalance. The group, which has been boosting production, stated the rise in oil inventories in recent weeks coupled with fears about an economic slowdown ‘may require changing course’. (Gulf- Times.com)  SABIC optimistic on growth potential; mulling investments overseas – Saudi Basic Industries Corp (SABIC) is evaluating investment opportunities in Africa, China and the US, underpinned by a positive global economic outlook, its CEO, Yousef Al-Benyan said. The petrochemical giant reported a 5.4% rise in third quarter net profit, citing higher average selling prices and increase in sales volumes. To boost growth, SABIC is looking for investment opportunities in Africa, which is a promising market for maintaining sales growth. He added that the outlook for business in the US, Asia and China remained positive, despite some challenges from high energy prices. (Reuters)  SPA: Saudi Arabia gets applications for tenth Sukuk – Saudi Arabia got applications for the issue of its tenth Sukuk and the total issue size is set at SR3.25bn, the state-run Saudi Press Agency (SPA) reported. There are three tranches for this Sukuk; the size of the first tranche which matures in 2023 is set at SR2.33bn, the size of the second tranche which matures in 2025
  6. 6. Page 6 of 8 is set at SR0.360bn, and the size of the third tranche which matures in 2028 is set at SR0.560bn. (Bloomberg)  Saudi Arabia’s net foreign assets fall MoM to SR1,874.7bn in September – Saudi Arabia’s net foreign assets fell to SR1,874.7bn in September from SR1,883.5bn in August, according to Saudi Arabian Monetary Authority (SAMA) data for September. The central bank’s total reserve assets fell to SR1,902.bn in September from SR1,910.9bn in August. Further, foreign exchange and deposits abroad fell to SR659.6bn in September from SR691.5bn in August. Investment in foreign securities rose to SR1,204.8bn in September from SR1,182.1bn in August. (Bloomberg)  September’s bank sales of foreign exchange to non-Saudi Arabian individuals down to SR9.8bn – Bank sales of foreign currency to non- Saudis for personal transfers fell to SR9.8bn in September from SR10.4bn in August, according to a summary from SAMA. The total sales of foreign exchange for specific purposes rose to SR27.4bn in September from SR25.1bn in August. (Bloomberg)  Majid Al Futtaim’s CEO says UAE’s consumer sentiment is improving – Consumer sentiment in the UAE is starting to improve and should rebound next year as higher oil prices prompt more government spending, according to Majid Al Futtaim’s CEO Alain Bejjani. “I am optimistic in a sea of pessimism. I think the worst is behind us,” Bejjani said. Consumer spending in the UAE has been hit by the introduction of Value Added Tax (VAT) earlier this year and slowing economic growth. It prompted the government to announce a raft of measures, including scrapping fees to hire foreign workers, freezing school fees and encouraging expatriates to stay longer. (Bloomberg)  UAE issues new law governing central bank, financial institutions – The UAE has issued a new law governing the central bank and the regulation of financial institutions and activities in an effort to bolster monetary performance and confidence in the economy. The new law, which updates old legislation dating back more than three decades, raises the central bank’s capital to AED20bn and allows for the establishment of a general reserve of up to four times the paid up capital. As well as ensuring prudent management of foreign reserves, the new rules are designed to protect stability of the financial system and help stability of the currency. The law, which was issued after a decree by Sheikh Khalifa bin Zayed al- Nahyan, President of the UAE, does not apply to financial free zones and the financial institutions, most of them foreign, that operate within them and are regulated by the authorities of those zones. The new law would help establish better regulations for monitoring credit, enabling the UAE to achieve balanced economic growth, according to Deputy Ruler of Dubai and Finance Minister, Sheikh Hamdan Bin Rashid. The law also includes new provisions relating to governance of financial institutions licensed by the central bank and penalties for companies in breach of the rules. It also contains provisions designed to boost consumer protection, including the confidentiality, protection, and appropriate use of customer financial information, as well as aiming to raise levels of financial inclusion. (Reuters)  Sharjah government committed to free trade – During the participation in the World CEO Forum, Sharjah Airport International Free Zone (SAIF Zone) Authority stated that the achievements of SAIF Zone help in demonstrating and reflect the Sharjah government’s commitment to free trade. The SAIF Zone Authority also stated that the various unique services that it offers have enabled it to develop into a leading platform for conducting business both nationally and globally, and helped it to transform into a business centre that houses more than 8,000 companies from 160 countries. (GulfBase.com)  UAE, Pakistan enhance cooperation – UAE’s Minister of State, Sultan Bin Ahmad Sultan Al Jaber said that the UAE’s leadership attaches great importance and particular attention to enhancing historic ties with Pakistan, which are based on strong pillars of respect, mutual confidence and conformity on all regional and international issues. Al Jaber and Pakistani officials’ discussions focused on ways to enhance cooperation between the two countries, especially in economic development, infrastructure, energy, agriculture fields and ways to increase bilateral trade. The two sides agreed on a roadmap and a practical framework for developing bilateral economic cooperation leveraging the multiple opportunities and advantages available to invest in various vital sectors, especially in energy, oil, agriculture, communications, infrastructure, housing, and urban development. (GulfBase.com)  UAE, Bahrain discuss financial operations – The UAE and Bahrain have reviewed their latest efforts in administering government financial operations, and also expressed their keenness to cooperate toward achieving common goals that are aligned with their shared vision and history. This was discussed when a delegation from the Ministry of Finance of Bahrain visited the UAE Ministry of Finance. Saeed Rashid Al Yateem, Assistant Under-Secretary of Resources and Budget Sector at UAE’s Ministry of Finance reiterated the strong historical relationship between the two countries. (GulfBase.com)  A total of 13 transport projects will be awarded soon by Kuwaiti authorities – Kuwait’s General Authority for Roads and Land Transport announced that 13 transport projects would be awarded soon, ahead of the final signature. Director General of the Authority, Ahmad Al-Hassan said that the projects include extension of the Seventh Ring Road, extension of Salmi highway, northern territorial road and development of Al- Mutla’a road, besides finishing up the second and third phases of South Surra areas. (GulfBase.com)  Oman’s CMA discusses unified insurance policy – Oman’s Capital Market Authority (CMA) and its partners have devised a comprehensive plan to provide insurance coverage to all private sector employees beginning next year. During a recent meeting with the health insurance committee, health insurers and agents were briefed on the plan and its implementation phases. Additionally, CMA offered an overview of the main features of the new unified insurance policy that will be launched prior to the implementation phase. An outcome of many discussions led by CMA, this meeting ensures the participation of concerned parties, as well as a review of their views during project planning and setting basic standards. The committee met representatives from private health
  7. 7. Page 7 of 8 institutions, in coordination with the Ministry of Health and representatives from the General Federation of Oman Trade Unions. (GulfBase.com)  Oman Gas Company to add 500-600 kilometers of new pipeline capacity – Oman Gas Company (OGC), the energy infrastructure vertical of the restructured Oman Oil Company (OOC), is ramping up its gas and liquids transportation capacity through investments in new pipelines serving industrial and petrochemical hubs in Suhar and Duqm. The wholly government-owned company is also making the transition from a national gas network operator to an independent, integrated energy transportation and distribution services provider. In conjunction with this transformation, OGC is poised to see its pipeline network, the centerpiece of the nation’s gas grid, grow by around 25%. OGC’s Acting Executive Managing Director said, “In the coming years, we will see another 500-600 kilometer of pipelines added to OGC’s national gas transmission network, mainly catering to the new industrial hub in Duqm, as well as to meeting demand growth in the Suhar area. This represents significant growth and will take the total length of our gas network to well over 3,000 kilometers.” (GulfBase.com)  Islamic International Rating Agency assigns investment grade rating to Al Baraka Banking Group – Al Baraka Banking Group (BARKA), the Bahrain-based international Islamic banking group, announced that Islamic International Rating Agency (IIRA) has assigned it the investment grade rating of ‘BBB+’ (Long Term) / ‘A3’ (Short Term) ratings with a ‘Stable’ Outlook. The rating report recognized BARKA’s widely diversified presence in MENA, Turkey, South Africa and Asia along with strong and well-reputed local partners in its subsidiaries which served to offset the systemic risks that some of the jurisdictions of the group were exposed to. IIRA further added that the group derives considerable benefits from its strong franchise in the local deposit markets of the jurisdictions where it is present, to provide a stable and cost effective source of liquidity. In these times of challenging conditions, BARKA is adequately buffered by provisions and collaterals, which have mitigated the risks to a large extent. The Additional Tier 1 Sukuk issued last year has further bolstered the capital of the group and enhanced its loss- absorption capabilities. (Bahrain Bourse)
  8. 8. 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 8 of 8 Rebased Performance Daily Index Performance Source: Bloomberg Source: Bloomberg Source: Bloomberg Source: Bloomberg (*$ adjusted returns) 45.0 70.0 95.0 120.0 Aug-14 Aug-15 Aug-16 Aug-17 Aug-18 QSE Index S&P Pan Arab S&P GCC (0.4%) (0.1%) 0.0% 0.3% 0.0% 0.3% (0.4%)(0.6%) (0.3%) 0.0% 0.3% 0.6% SaudiArabia Qatar Kuwait Bahrain Oman AbuDhabi Dubai Asset/Currency Performance Close ($) 1D% WTD% YTD% Global Indices Performance Close 1D%* WTD%* YTD%* Gold/Ounce 1,233.13 0.1 0.5 (5.4) MSCI World Index 1,981.89 (1.2) (3.9) (5.8) Silver/Ounce 14.69 0.3 0.8 (13.3) DJ Industrial 24,688.31 (1.2) (3.0) (0.1) Crude Oil (Brent)/Barrel (FM Future) 77.62 0.9 (2.7) 16.1 S&P 500 2,658.69 (1.7) (3.9) (0.6) Crude Oil (WTI)/Barrel (FM Future) 67.59 0.4 (2.2) 11.9 NASDAQ 100 7,167.21 (2.1) (3.8) 3.8 Natural Gas (Henry Hub)/MMBtu 3.27 (3.3) 1.6 (7.6) STOXX 600 352.34 (0.6) (3.5) (14.2) LPG Propane (Arab Gulf)/Ton 86.00 (0.3) (8.0) (12.0) DAX 11,200.62 (0.7) (4.1) (17.8) LPG Butane (Arab Gulf)/Ton 91.25 (0.7) (12.8) (13.6) FTSE 100 6,939.56 (0.9) (3.4) (14.4) Euro 1.14 0.2 (1.0) (5.0) CAC 40 4,967.37 (1.1) (3.4) (11.4) Yen 111.91 (0.5) (0.6) (0.7) Nikkei 21,184.60 0.2 (5.6) (6.4) GBP 1.28 0.1 (1.9) (5.1) MSCI EM 939.55 (1.0) (3.3) (18.9) CHF 1.00 0.2 (0.1) (2.3) SHANGHAI SE Composite 2,598.85 (0.1) 1.7 (26.4) AUD 0.71 0.1 (0.4) (9.2) HANG SENG 24,717.63 (1.1) (3.3) (17.7) USD Index 96.36 (0.3) 0.7 4.6 BSE SENSEX 33,349.31 (0.9) (2.4) (14.5) RUB 65.71 0.2 0.3 14.0 Bovespa 85,719.87 2.4 2.9 1.0 BRL 0.27 1.7 1.9 (9.1) RTS 1,098.31 (2.0) (2.5) (4.9) 75.6 74.0 73.1

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