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QNBFS Daily Market Report October 30, 2018

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The QSE Index rose 0.5% to close at 10,191.7

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QNBFS Daily Market Report October 30, 2018

  1. 1. Page 1 of 8 QSE Intra-Day Movement Qatar Commentary The QSE Index rose 0.5% to close at 10,191.7. Gains were led by the Banks & Financial Services and Transportation indices, gaining 1.1% and 0.7%, respectively. Top gainers were Doha Insurance Group and The Commercial Bank, rising 6.4% and 2.3%, respectively. Among the top losers, Islamic Holding Group fell 5.3%, while Gulf International Services was down 4.7%. GCC Commentary Saudi Arabia: The TASI Index rose 0.6% to close at 7,847.5. Gains were led by the Food & Staples Retailing and Transport. indices, rising 6.3% and 2.6%, respectively. Saudi Enaya Cooperative Insurance Co. and Saudi Cable Co. were up 10% each. Dubai: The DFM General Index declined 0.4% to close at 2,714.8. The Real Estate & Const. index fell 1.4%, while the Transportation index declined 0.9%. Gulf Navigation Holding fell 2.7%, while Emaar Properties was down 2.5%. Abu Dhabi: The ADX General Index fell 0.5% to close at 4,871.6. The Services index declined 1.3%, while the Banks index fell 0.9%. National Corp Tourism & Hotel declined 9.9%, while Arkan Building Materials Co. was down 5.5%. Kuwait: The Kuwait Main Market Index declined marginally to close at 4,697.9. The Insurance and Consumer Goods indices fell 1.0% each. Tamdeen Real Estate Company fell 10.0%, while Warba Insurance Company was down 8.0%. Oman: The MSM 30 Index fell 0.6% to close at 4,428.8. Losses were led by the Services and Industrial indices, falling 1.2% and 0.5%, respectively. Dhofar Int.Dev. and Inv. Hold. fell 10.0%, while Sembcorp Salalah was down 8.6%. Bahrain: The BHB Index fell 0.3% to close at 1,315.0. The Industrial index declined 0.8%, while the Investment index fell 0.3%. GFH Financial Group declined 1.5%, while BMMI was down 1.4%. QSE Top Gainers Close* 1D% Vol. ‘000 YTD% Doha Insurance Group 13.39 6.4 0.2 (4.4) The Commercial Bank 40.93 2.3 175.3 41.6 Qatar Industrial Manufacturing Co 42.50 2.3 3.1 (2.7) Doha Bank 21.68 1.6 247.1 (23.9) Al Khalij Commercial Bank 11.25 1.5 34.2 (20.8) QSE Top Volume Trades Close* 1D% Vol. ‘000 YTD% Gulf International Services 19.06 (4.7) 616.5 7.7 QNB Group 190.00 1.1 502.9 50.8 Ezdan Holding Group 10.75 0.5 413.1 (11.0) Masraf Al Rayan 37.90 1.0 344.9 0.4 Qatar First Bank 4.36 (1.1) 344.1 (33.2) Market Indicators 29 Oct 18 28 Oct 18 %Chg. Value Traded (QR mn) 231.5 72.0 221.4 Exch. Market Cap. (QR mn) 572,725.4 570,412.7 0.4 Volume (mn) 4.7 2.9 61.6 Number of Transactions 2,803 1,711 63.8 Companies Traded 42 41 2.4 Market Breadth 20:20 19:17 – Market Indices Close 1D% WTD% YTD% TTM P/E Total Return 17,956.60 0.5 0.4 25.6 15.1 All Share Index 3,007.82 0.4 0.4 22.6 15.1 Banks 3,695.48 1.1 0.8 37.8 13.9 Industrials 3,371.46 (0.6) (0.0) 28.7 16.0 Transportation 2,158.40 0.7 (0.2) 22.1 12.6 Real Estate 1,903.68 0.4 0.3 (0.6) 15.9 Insurance 3,074.69 0.2 0.2 (11.6) 18.7 Telecoms 938.89 (0.5) (0.9) (14.5) 35.9 Consumer 6,966.39 (0.3) 0.2 40.4 13.8 Al Rayan Islamic Index 3,877.57 0.0 0.3 13.3 15.2 GCC Top Gainers ## Exchange Close # 1D% Vol. ‘000 YTD% Mobile Telecom. Co. Saudi Arabia 6.51 6.9 10,667.4 (10.9) Saudi Ground Serv. Co. Saudi Arabia 33.80 5.0 767.1 (14.0) F. A. Al Hokair Saudi Arabia 21.70 4.6 980.2 (28.6) Saudi Int. Petrochemical Saudi Arabia 22.00 4.0 1,613.4 26.1 Saudi Industrial Inv. Saudi Arabia 26.15 3.4 1,582.3 36.5 GCC Top Losers ## Exchange Close # 1D% Vol. ‘000 YTD% Sembcorp Salalah Oman 0.19 (8.6) 12.0 (16.5) Emaar Properties Dubai 4.76 (2.5) 8,293.7 (27.2) Savola Group Saudi Arabia 31.00 (2.1) 352.9 (21.5) Banque Saudi Fransi Saudi Arabia 32.65 (1.7) 1,039.3 14.2 Qurain Petrochemical Ind. Kuwait 0.39 (1.5) 633.0 17.9 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% Islamic Holding Group 23.20 (5.3) 21.4 (38.1) Gulf International Services 19.06 (4.7) 616.5 7.7 Qatar National Cement Company 60.00 (4.0) 9.0 (4.6) Al Meera Consumer Goods Co. 147.50 (3.7) 43.6 1.8 Qatari German Co for Med. Dev. 4.70 (3.7) 7.1 (27.2) QSE Top Value Trades Close* 1D% Val. ‘000 YTD% QNB Group 190.00 1.1 95,468.8 50.8 Industries Qatar 140.00 (0.6) 23,277.3 44.3 Qatar Islamic Bank 145.80 1.3 16,511.4 50.3 Masraf Al Rayan 37.90 1.0 12,983.1 0.4 Gulf International Services 19.06 (4.7) 11,792.6 7.7 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* 10,191.68 0.5 0.4 3.9 19.6 63.66 157,327.7 15.1 1.5 4.3 Dubai 2,714.83 (0.4) (0.8) (4.2) (19.4) 43.78 97,749.4 7.3 1.0 6.5 Abu Dhabi 4,871.58 (0.5) (0.2) (1.3) 10.8 32.81 132,480.8 13.0 1.4 4.9 Saudi Arabia 7,847.51 0.6 0.2 (1.9) 8.6 1,019.74 498,968.3 16.2 1.8 3.6 Kuwait 4,697.88 (0.0) 0.0 (0.8) (2.7) 32.52 32,161.6 14.8 0.9 4.4 Oman 4,428.80 (0.6) (0.5) (2.5) (13.1) 6.91 19,120.3 10.2 0.8 6.2 Bahrain 1,315.04 (0.3) (0.0) (1.8) (1.3) 6.10 20,350.1 8.9 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) 10,050 10,100 10,150 10,200 10,250 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 rose 0.5% to close at 10,191.7. The Banks & Financial Services and Transportation 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 The Commercial Bank were the top gainers, rising 6.4% and 2.3%, respectively. Among the top losers, Islamic Holding Group fell 5.3%, while Gulf International Services was down 4.7%.  Volume of shares traded on Monday rose by 61.6% to 4.7mn from 2.9mn on Sunday. However, as compared to the 30-day moving average of 6mn, volume for the day was 21.6% lower. Gulf International Services and QNB Group were the most active stocks, contributing 13.2% and 10.8% 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) 3Q2018 % Change YoY Operating Profit (mn) 3Q2018 % Change YoY Net Profit (mn) 3Q2018 % Change YoY Zahrat Al Waha for Trading Co. Saudi Arabia SR 141.6 16.3% 14.1 -26.8% 9.5 -44.6% Thob Al Aseel Co. Saudi Arabia SR 61.2 -7.8% 4.4 -55.5% 1.7 -79.1% Mobile Telecommunication Company Saudi Arabia Saudi Arabia SR 1,952.0 8.0% 268.0 17.0% 48.0 1,500.0% United Electronics Company Saudi Arabia SR 895.0 15.0% 34.1 21.4% 30.9 18.4% Saudi Industrial Investment Group Saudi Arabia SR 2,297.0 30.9% 755.0 38.3% 319.0 41.2% National Petrochemical Co. Saudi Arabia SR 2,297.0 30.9% 569.0 40.8% 307.0 55.8% Al Gassim Investment Holding Co. Saudi Arabia SR 3.3 -28.6% 1.5 25.0% 1.2 -15.3% Herfy Food Services Co. Saudi Arabia SR 329.2 5.6% 61.9 3.4% 58.1 3.7% Electrical Industries Co. Saudi Arabia SR 174.1 -23.4% 9.2 -30.7% 4.3 -62.3% National Industries Group Holding Kuwait KD 31.1 26.6% – – 7.4 247.8% Abu Dhabi Aviation Co. Abu Dhabi AED 460.9 8.7% – – 71.4 -27.5% Aluminium Bahrain Bahrain BHD 234.6 -0.3% – – 14.3 -44.4% Source: Company data, DFM, ADX, MSM, TASI, BHB. Global Economic Data Date Market Source Indicator Period Actual Consensus Previous 10/29 UK Bank of England Net Consumer Credit September 0.8bn 1.2bn 1.2bn 10/29 UK Bank of England Mortgage Approvals September 65.3k 64.7k 66.1k 10/29 UK Bank of England M4 Money Supply YoY September 0.9% – 1.1% 10/29 Japan METI Retail Trade YoY September 2.1% 2.1% 2.7% 10/29 Japan METI Retail Sales MoM September -0.2% -0.2% 0.9% 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 3Q2018 results No. of days remaining Status ZHCD Zad Holding Company 30-Oct-18 0 Due QNNS Qatar Navigation (Milaha) 30-Oct-18 0 Due MCCS Mannai Corporation 30-Oct-18 0 Due Source: QSE Overall Activity Buy %* Sell %* Net (QR) Qatari Individuals 13.77% 36.27% (52,112,780.13) Qatari Institutions 13.49% 17.39% (9,028,794.77) Qatari 27.26% 53.66% (61,141,574.90) GCC Individuals 0.22% 1.20% (2,257,371.65) GCC Institutions 10.11% 3.24% 15,900,232.05 GCC 10.33% 4.44% 13,642,860.40 Non-Qatari Individuals 5.97% 5.48% 1,144,900.57 Non-Qatari Institutions 56.44% 36.42% 46,353,813.93 Non-Qatari 62.41% 41.90% 47,498,714.50
  3. 3. Page 3 of 8 News Qatar  Doha Bank cuts UAE exposure with asset swaps – Doha Bank has cut its exposure to the UAE through an asset swap with UAE banks amid strained relations between the two countries, four sources said. As part of moves by some Qatari companies to try to trim exposure to the Gulf’s main financial and wealth center, Doha Bank has been in talks with the UAE banks to sell some of its loan book and other assets since last year. Qatar has been locked in a protracted dispute with Saudi Arabia, the UAE, Bahrain and Egypt since June 2017. Some banks from Saudi Arabia, the UAE and Bahrain pulled deposits and loans from Qatari banks following the rift, as well as avoiding new letters of credit and other financing deals. Asset swaps by Doha Bank, Qatar’s fifth largest, were continuing but some had already been done with First Abu Dhabi Bank, the UAE’s largest bank by assets, and others for some of their holdings in Qatar, one of the sources said. A second source said the move was in the interests of both Doha Bank and the UAE banks, given the tense political backdrop. (Reuters)  ORDS posts ~13% YoY decrease but ~99% QoQ increase in net profit in 3Q2018 – Ooredoo's (ORDS) net profit declined ~13% YoY (but rose ~99% on QoQ basis) to ~QR403mn in 3Q2018. EPS amounted to QR3.41 in 9M2018 as compared to QR4.87 in 9M2017. In 9M2018, ORDS posted a net profit of nearly QR1.1bn as compared to QR1.6bn in 9M2017. ORDS’ nine-month results were ‘significantly negatively impacted’ by the overall foreign exchange weakness in emerging markets as well as the market situation in Indonesia, following the new SIM card registration regulation. The group’s nine-month revenue stood at QR22.8bn, driven by ‘strong’ contributions from Qatar, Kuwait, Oman, Iraq and Myanmar, but offset by reductions in Indonesia and Algeria. Group revenue before the foreign exchange impact decreased by 5%, while ‘reported revenue’ decreased by 7% YoY. Group EBITDA stood at QR9.3bn with a corresponding EBITDA margin of 41%. Group EBITDA decreased by 11% YoY, mainly due to lower revenue, while pre-FX EBITDA decreased by 9%. Revenue from data contributed QR10.5bn in the nine- month period under review. “Increased monetization of data business, with significant data growth coming from consumer and enterprise customers saw data revenue increasing to 46% of the group revenue,” ORDS stated. ORDS’ Chairman, HE Sheikh Abdulla bin Mohamed bin Saud Al-Thani said, “ORDS maintains its global leadership in telecom innovation, being the first telecom operator to test the world’s first self-driving 5G connected aerial taxis, in line with our mission to support Qatar’s digital transformation vision. 5G technology is now a reality in Qatar, where we have 80+ live 5G sites and counting. We continue to enrich people’s digital lives in our countries of operation, and I am pleased to say that during the period our outstanding efforts were recognized with world-class awards. Our network has been voted Qatar’s fastest mobile network in 2018 by Ookla. In Oman, we were awarded the ‘Best National Network Operator’ and the ‘Best Digital Content Creator’ by Telecoms World Middle East, while in Iraq we were awarded the CARE Award for Excellence in Customer Service. “Digital enablement is the future and we remain committed to making the right investments to deliver new technologies to our customers, unlocking more of their potential and helping them prosper in a digital world. 46% of our revenues are now generated from our data and digital business.” (QSE, Gulf- Times.com)  MPHC's bottom line rises ~7% YoY and ~17% QoQ in 3Q2018 – Mesaieed Petrochemical Holding Company's (MPHC) net profit rose ~7% YoY (~+17% QoQ) to ~QR362mn in 3Q2018. EPS amounted to QR0.82 in 9M2018 as compared to QR0.64 in 9M2017. In 9M2018, MPHC reported 28% YoY jump in net profit to QR1.0bn helped by improved selling prices and higher sales volumes. MPHC, one of the region’s premier diversified petrochemical conglomerates with interests in the production of olefins, polyolefin, alpha olefins and chlor-alkali products, showed a 17% QoQ improvement in net profitability, as the previous quarter witnessed planned annual maintenance shutdown in one of the group companies’ plants. On a yearly basis, selling prices expanded 13% and sales volumes by 5%. Moreover, the groups’ profit for the period was also aided by the recognition of a tax refund of approximately QR98mn for the period. The group continued to benefit from the supply of competitively priced ethane feedstock and fuel gas under long- term supply agreements, a company’s spokesman said. “This contracting arrangement is an important value driver for the group’s profitability in a challenging market,” he added. The closing cash position was a robust QR1.5bn as on September 30, 2018. The total assets at the end of nine-month this year was QR14.9bn compared to QR14.8bn at the end of December 31, 2017. (QSE, Gulf-Times.com)  QFBQ reports net loss of QR71.7mn in 3Q2018 – Qatar First Bank (QFBQ) reported net loss of QR71.7mn in 3Q2018 as compared to net loss of QR62.9mn in 3Q2017 and net loss of QR325.2mn in 2Q2018. The company's revenue from non- banking activities came in at QR27.9mn in 3Q2018, which represents an increase of 22.0% YoY. However, on QoQ basis, revenue from non-banking activities fell 69.1%. The bank's total assets stood at QR4.0bn at the end of September 30, 2018, down 27.0% YoY (-5.3% QoQ). Financing assets were QR1.4bn, falling 8.5% YoY. However, on QoQ basis, financing assets increased 5.4%. Financing liabilities declined 58.6% YoY and 62.2% QoQ to reach QR0.3bn at the end of September 30, 2018. QFBQ recorded net loss of QR425.5mn in 9M2018 compared to net loss of QR139.6mn in 9M2017. QFBQ’s Head of Treasury and Investment Management, Ayman Zaidan said, “After a challenging nine months with global and regional headwinds, QFBQ recorded a net loss of QR425.5mn, where prevailing market uncertainties are among the major concerns for the reduction in banks revenue.” He said QFBQ’s ambitious cost rationalization plan initiated in first half of 2016 continues to generate positive results by reducing staff cost, other operating expenses, and finance cost by 29.8%, 12.5%, and 9.6%, respectively compared to nine-month period in 2017. He added, “Furthermore, other income increased mainly due to fair value of Shari’ah-compliant risk management instruments and fee income from the structured products. The bank is continuing its program of creating liquidity from private equity portfolio, while working with partners on new opportunities in developed markets that will be seeded and managed by QFBQ.” (QSE, Peninsula Qatar, Gulf-Times.com)
  4. 4. Page 4 of 8  ERES' net profit declines 83.9% YoY and 87.1% QoQ in 3Q2018 – Ezdan Holding Group's (ERES) net profit declined 83.9% YoY (- 87.1% QoQ) to QR41.2mn in 3Q2018. The company's rental income came in at QR329.9mn in 3Q2018, which represents a decrease of 8.0% YoY. However, on QoQ basis, rental income was flat. In 9M2018, ERES posted net profit of QR463.5mn as compared to QR1,410.6mn in 9M2017. The company generated operating revenue of QR1.15bn in 9M2018. “The decline in ERES’ reported net profit came on the back of that some of the group’s subsidiaries had sold all the investment units in a number of investment funds during the onset of last year,” ERES stated. “ERES operates an array of significant investments, mainly the real estate sector, where its owned properties in Doha and its environs amount to approximately 34,000 multi-purpose units. The group also owns and runs three sumptuous hotels and suites in Doha, in addition to three malls with outstanding, top-class brands in Gharaffa, Wakrah, and Wukair. The group also has a portfolio that abounds in diversified investments in various sectors,” ERES added. (QSE, Peninsula Qatar, Gulf-Times.com)  QGRI reports net profit of QR16.7mn in 3Q2018 – Qatar General Insurance & Reinsurance Company (QGRI) reported net profit of QR16.7mn in 3Q2018 as compared to net loss of QR4.4mn in 3Q2017 and net loss of QR1.1mn in 2Q2018. In 9M2018, QGRI reported net profit of QR70.8mn as compared to QR35.3mn in 9M2017. EPS amounted to QR0.81 in 9M2018 as compared to QR0.40 in 9M2017. (QSE)  DOHI's net profit declines ~37% YoY and ~93% QoQ in 3Q2018 – Doha Insurance Group's (DOHI) net profit declined ~37% YoY (~-93% QoQ) to ~QR0.5mn in 3Q2018. In 9M2018, DOHI reported net profit of ~QR35.4mn as compared to net profit of QR34.7mn in 9M2017. EPS amounted to QR0.71 in 9M2018 as compared to QR0.69 in 9M2017. (QSE)  SIIS reports net loss of QR16.3mn in 3Q2018 – Salam International Investment Limited (SIIS) reported net loss of QR16.3mn in 3Q2018 as compared to net loss of QR21.5mn in 3Q2017 and net loss of QR4.4mn in 2Q2018. The company's operating revenue came in at QR603.9mn in 3Q2018, which represents a decrease of 4.9% YoY (-3.4% QoQ). Operating revenue declined to QR1,956.8mn in 9M2018 from QR2,155.6mn in 9M2017. Loss per share amounted to QR0.25 in 9M2018 as compared to QR0.03 in 9M2017. (QSE)  QNB Group wins ‘The Best Bank for Treasury and Cash Management in Qatar’ award – QNB Group has received the award of ‘The Best Bank for Treasury & Cash Management in Qatar in 2018’ at the awards ceremony held on the sidelines of the Seventh Annual Global Finance Transaction Processing Awards Ceremony on the sidelines of the SIBOS Conference in Sydney Australia. (Peninsula Qatar)  Qatar’s PPI increases 36.1% on yearly basis – Qatar’s industrial producers’ earnings witnessed a robust double-digit expansion YoY in September 2018, on the back of strong prices, especially for crude, refined petroleum products, basic chemicals, dairy products and paper, according to official estimates. Qatar’s Producer Price Index (PPI) – a measure of the average selling prices received by the domestic producers for their output – increased 36.1% on a yearly basis and 1.9% MoM, during the review period, according to figures released by the Ministry of Development Planning and Statistics (MDPS). MDPS had released a new PPI series in late 2015. With a base of 2013, it draws on an updated sampling frame and new weights. The previous sampling frame dates from 2006, when the Qatari economy was much smaller than today and the range of products made domestically much narrower. The PPI for mining, which carries the maximum weight of 72.7%, saw 42.8% rise YoY in September 2018, on account of 43.1% increase in the price of crude petroleum and natural gas and 3.3% in stone, sand and clay. The mining PPI rose 1.4% on a monthly basis, as crude petroleum and natural gas prices grew 1.6% and stone, sand and clay by 0.2%. The manufacturing sector, which has a weight of 26.8% in the PPI basket, witnessed 23.6% yearly expansion this September owing to a 31.9% rise in the price of refined petroleum products, 15.6% in dairy products, 12.7% in basic chemicals, 11.1% in basic metals, 10.7% in paper and paper products, 7.5% in juices, 5.5% in other chemical products and fibers, 1.1% in rubber and plastics products and 0.2% in beverages. (Gulf-Times.com)  Qatalum working on plans to boost revenue with value-added products – Qatar Aluminium (Qatalum), which seeks to limit cash cost to $120 per metric ton by 2021, is planning to enhance revenue by focusing on selling value-added products and optimizing working capital. In its Initial Public Offering (IPO) prospectus, Qatar Aluminium Manufacturing Company (Qamco), to which the country’s hydrocarbon bellwether, Qatar Petroleum (QP) will transfer its 50% stake in Qatalum, said one of the strategic objectives is to maximize shareholder returns by increasing financial returns. Subscriptions to the QR2.73bn Qamco IPO begin today and will be on tap until November 12. Many banks have already extended financing for the IPO, which is expected to generate interests from the nationals. Highlighting that Qatalum focuses on three areas to grow financial returns through 2022, it said there was a need to enhance sales revenue for which it intends to focus on value- added products, both optimizing its existing product portfolio by concentrating on the most profitable product ranges and moving towards new, more demanding and profitable products. (Gulf-Times.com)  Qatar Airways Cargo rolls out automated mail management system – Qatar Airways Cargo has rolled out an automated mail management system at more than 50 stations across its global network, making it the first in the industry to introduce this major enhancement to its business. The cargo carrier has also signed an agreement with leading logistics solutions-provider, Descartes, and integrated its ‘Descartes vMail’ solution with its in-house cargo management information system, cargo reservations, operations, accounting and management information systems (CROAMIS) for electronic data interchange messaging. (Gulf-Times.com) International  US consumer spending solid; income gain smallest in 15 months – US consumer spending rose for a seventh straight month in September, but income recorded its smallest gain in more than a year on moderate wage growth, suggesting the current pace of spending was unlikely to be sustained. The report from the Commerce Department on October 29 also showed the increase in income at the disposal of households
  5. 5. Page 5 of 8 was the smallest in 15 months and savings dropped to their lowest level since December last year. There are signs the stimulus from the Trump administration’s $1.5tn tax cut package has peaked. Higher interest rates and falling household wealth after a sharp stock market selloff are also casting a shadow on spending. Consumer spending, which accounts for more than two-thirds of US economic activity, increased 0.4% last month as households bought more motor vehicles and spent more on health care. Data for August was revised up to show spending advancing 0.5% instead of the previously reported 0.3% gain. Economists polled by Reuters had forecasted consumer spending increasing 0.4% in September. When adjusted for inflation, consumer spending rose 0.3%. The so-called real consumer spending climbed 0.4% in August. (Reuters)  BoE: UK’s lending growth hits three-year low after new car sales fall – British consumer borrowing rose at the slowest rate in more than three years last month after new car sales fell by a fifth, the Bank of England (BoE) stated on October 29, in news likely to raise concern about the economy’s strength. Consumer spending has been a major factor in the British economy’s somewhat faster-than-expected growth since June 2016’s Brexit vote, despite a jump in inflation that has eroded household incomes. The BoE data showed that YoY growth in unsecured consumer lending slowed to 7.7% in September from 8.2% in August, the weakest pace since June 2015. And comparing the three months to September with the previous three months, credit growth was the weakest since January 2014, up just 5.5% on an annualized basis. Auto industry data earlier this month showed that British new car registrations dropped by 20.5% YoY in September, one of the key selling months because of a twice-yearly change in license plate numbers. While part of the decline reflects disruption as environmental concern leads car buyers to turn away from diesel vehicles, some surveys have also showed more general consumer caution in the run-up to Brexit. (Reuters)  Environment Minister: China’s environment facing pressures from economic slowdown – China’s pollution control efforts are coming under increasing pressure from the nation’s slowing economy and officials must not drop their guard this winter, the country’s Environment Minister said in remarks published on October 29. At a meeting last week, Minister of Ecology and Environment, Li Ganjie told officials that China’s clean-up campaign was becoming “increasingly complex”, according to details of the meeting published by the ministry’s official publication, China Environmental News. Chinese President, Xi Jinping earlier this year promised to use the full might of the Communist Party to tackle the country’s longstanding environmental problems, but the government is also trying to ensure the war on pollution does not disrupt an already slowing economy. After shutting down huge swathes of industry last winter to meet politically crucial smog targets, it has promised to take a more flexible approach this year, giving local governments the power to set their own goals. (Reuters)  Japan’s jobless rate falls to 2.3% MoM in September – Japan’s jobless rate fell in September, while the availability of jobs improved to the highest level since January 1974, government data showed. The seasonally-adjusted unemployment rate fell to 2.3% from 2.4% in August, and compared with economists’ median forecast for the rate to remain unchanged, figures from the Internal Affairs ministry showed. The jobs-to-applicants ratio rose to 1.64 from 1.63 in August. The median forecast was for the ratio to remain unchanged. (Reuters)  Reuters poll: China’s factory growth seen cooling further as US tariff impact mounts – Growth in China’s factory sector likely cooled further in October as domestic demand faltered and exporters felt a bigger sting from an intensifying trade war with the US, a Reuters poll showed. The official manufacturing Purchasing Managers’ Index (PMI) is expected to have slipped to 50.6, the lowest since February and down from 50.8 in September, according to the median forecast of 34 economists in a Reuters poll. The 50-mark divides expansion from contraction on a monthly basis. Separately, a private survey on China’s manufacturing sector is forecasted to show activity contracted for the first time since May 2017, though the decline may be marginal. Such downbeat readings would signal a further loss of momentum in the world’s second-largest economy, adding to worries about risks to global growth, and would likely prompt Beijing to launch more support and stimulus measures on top of a raft of initiatives in recent months. The economy grew by a slower-than-expected 6.5% in the third quarter, its weakest pace since the global financial crisis, and analysts believe business conditions will get worse before they get better. October is the first full month after the latest US tariffs went into effect. The US and China slapped additional tariffs on each other’s goods on September 24. If the US follows through on its promise to increase its tariffs to 25% at the turn of the year, exporters will feel more pain, according to Chinese businessmen. (Reuters) Regional  MENA Cinema Forum opens as global cinema market hits $40bn in 2018 – Cinema and movies are playing a pivotal role in cultural unity while the MENA Cinema Forum brings over 45 top notch international speakers and 500 plus delegates from 45 countries in Dubai to dissect the MENA cinema industry and how it can be part of global mainstream cinema economy. The two-day conference will discuss a variety of industry-related strategic topics, focusing on growth of the cinema industry in the Middle East region. The number of cinema screens in MENA is set to jump 38.4% to 1,800 in the next 3-5 years, up from 1,300 currently. The keynote panel discussed the economic impact of the growing cinema market in the MENA region, the effect of the Saudi Arabian cinema market across the region, industry rules, regulations, policies and upcoming developments in the cinema sector, new markets, mergers and newcomers. Jan Runge, Independent Advisor on Cinema Strategy and Implementation and moderator, in his keynote address said, “There is a fine creative talent in the region, cinema today is truly international and now what we are looking here in MENA region to be part of $40bn global industry. Dubai as a hub of GCC entertainment has world renowned cinemas in Dubai.” (GulfBase.com)  Saudi Arabia 'working on $819bn construction projects' – Saudi Arabia’s construction sector is booming with over 5,200 construction projects currently rolling out in the region's largest and most populous country, a report released ahead of a major
  6. 6. Page 6 of 8 industry event in the Kingdom stated. The Big 5 Saudi, the Kingdom's premier construction event, will run from March 10 to 13, 2019 at the Jeddah Center for Forums and Events hosting more than 400 local and international exhibitors across dedicated product zones. Valued at $819bn, these account for 35% of the total value of active projects across the GCC, stated the report. Despite recent challenges faced by the sector attributed to low oil prices and a reported shortage of qualified workers, construction is recording a 4.1% increase this year in Saudi Arabia, it stated. A recent BMI research forecasts the sector's annualized average growth at 6.13% from 2018 to 2022. (GulfBase.com)  HSBC sees little impact on Saudi Arabia’s investment after Khashoggi murder – Saudi Arabia is unlikely to see significant impact on its foreign trade and investment flows following the killing of journalist Jamal Khashoggi, according to HSBC’s CEO, John Flint. He said, “It has been a difficult few weeks for the Kingdom, this has not been good for Saudi Arabia. I understand the emotion around the story, but it is very difficult to think about disengaging from Saudi Arabia given its importance to global energy markets.” (Reuters)  Emirates Islamic: Islamic banking on the rise in UAE – The popularity of Islamic banking products continues to grow in the UAE among both Muslim and non-Muslim customers, according to the findings of the 2018 ‘ISLAMIC BANKING INDEX’ by Emirates Islamic. The index is a benchmark survey revealing the progress, penetration and perception of the Shari’ah compliant banking sector in the UAE, as well as the future intentions of the nation’s banking customers. The findings demonstrate that Islamic banks are outperforming their conventional peers in customer acquisition. A total 55% of the UAE consumers now have at least one Islamic banking product, compared to 47% when the Index was launched in 2015. In contrast, the penetration score for conventional bank products has shrunk from 69% in 2017 to 63% in 2018. Commenting on the results of the 2018 Index, Wasim Saifi, Deputy CEO- Consumer Banking and Wealth Management at Emirates Islamic said, “We are delighted to see that Islamic banking continues to expand its appeal and reach, outpacing the growth of conventional banks. With 85% of the UAE’s banking population open to Islamic banking products, we can anticipate that Shari’ah compliant banking will gain further traction, especially as we prepare to receive an increased number of residents and visitors in the run up to Expo 2020 Dubai.” (GulfBase.com)  UAE ranks top globally in five Islamic economy sectors – The UAE is ranked top globally across five Islamic economy sectors out of eight, according to the Global Islamic Economy Report 2018-19, commissioned by Dubai Islamic Economy Development Centre (DIEDC) and produced by Thomson Reuters. In this year’s Islamic Economy Indicator, the UAE emerged at the second position. Sector wise, the UAE emerged in the first place across five sectors such as Halal Food, Halal Travel, Modest Fashion, Halal Media and Recreation, and Halal Pharmaceuticals and Cosmetics — compared to three sectors in 2017-18. This report estimates that global Muslim spend across lifestyle sectors was $2.1tn in 2017, while the Islamic finance sector has $2.4tn in total assets. Food and beverage leads Muslim spend by category at $1.3tn, followed by clothing and apparel at $270bn, media and entertainment at $209bn, travel at $177bn, and spending on pharmaceuticals and cosmetics at $87bn and $61bn respectively. (GulfBase.com)  RAK Gas signs pact for Zanzibar’s oil, gas exploration project – RAK Gas signed an oil and gas production sharing agreement with Tanzania’s Zanzibar government, the company stated. The agreement covers acreage known as Pemba Zanzibar Block, which measures 11,868 square kilometers. RAK Gas, an oil and gas exploration and production company, is owned by Ras Al Khaimah, one of seven emirates in the UAE. (Bloomberg)  Agthia Group considers expansion, cost cutting to increase its profitability – Abu Dhabi-based food and beverage maker, Agthia Group, plans to expand as competition in Gulf countries increases, the National newspaper reported, citing Agthia Group’s CEO, Tariq Al Wahedi. The company has forecasted a flat profit for the next year, impacted by changes in demographics of GCC countries. The company plans to cut costs and expects savings of AED60mn this year, with similar savings forecasted for the next year. Further, the company will be introducing new products, strategies to increase its market share and expanding into new markets. Accordingly, it is eyeing acquisitions in Saudi Arabia, planning to expand in Iraq, considering expansion into North Africa and the Levant, and also considering entering into the Asian markets. (Bloomberg)  ADGM, IDB to support strategic industrial projects – The Registration Authority of Abu Dhabi Global Market (ADGM) has signed a Memorandum of Understanding (MoU) with the Industrial Development Bureau (IDB) of the Abu Dhabi Department of Economic Development (DED). The MoU seeks to develop a platform to support strategic industrial projects with the aim of expanding the region’s industrial sector and promoting economic diversification. The increase in innovation-led advancements has resulted in the growth of the UAE’s industrial sector and it is becoming a key driver of the nation’s economic expansion. In support of greater development, the MoU between the IDB and ADGM will enable consultation, cooperation and the exchange of information in order to establish a platform for strategic industrial projects. The agreement aims to enhance cooperation in the interest of fulfilling each party’s respective regulatory mandates as well as facilitating the exchange of information relating to industrial companies standards, criteria and categories. (GulfBase.com)  Abu Dhabi’s home prices, rents continue fall in 3Q2018 – Apartment sales prices in investment zones of Abu Dhabi declined by 2.7% on average over the last 12 months, whereas prices declined marginally by 1.7% over the quarter. Villa sales prices also followed a similar trend, with quarterly and annual declines on average of 2.8% and 4.2%, respectively, according to the ‘Q3 2018 Abu Dhabi Market Report’ by Cavendish Maxwell, an independent firm of chartered surveyors and property consultants. Residential rents in Abu Dhabi investment zones have registered a 12 month decline by more than 5.6% on average, where apartment rents in Al Reem Island and villa rents in Al Raha Gardens and Saadiyat Beach one bedroom apartments on Reem Island can now be rented at AED84,000 on average, with rents for this unit type declining by 6.2% over the last 12 months. (GulfBase.com)
  7. 7. Page 7 of 8  Burgan Bank’s net income rises 32% YoY to KD71.0mn in 9M2018 – Burgan Bank reported net income of KD71.0mn in 9M2018, an increase of 32% YoY. Operating income increased by 15% YoY to reach KD206.6mn in 9M2018. The bank’s Chairman, Majed Essa Al Ajeel said, “The balance between domestic and international operations and focus on enhancing operating income streams has proven successful. We have a strong pipeline."(Bloomberg)  Warba Bank posts net income of KD3.48mn in 3Q2018 – Warba Bank reported net income for the third quarter of KD3.48mn. The bank’s operating revenue came in at KD12.1mn in 3Q2018 as compared to KD10mn in 3Q2017 and operating profit at KD7.56mn. The bank attributed the 57% rise in operating profit after provisions to increase in the finance portfolio by 19% and investment portfolio by 28%. (Bloomberg)  Ahli United Bank and Kuwait Finance House say merger talks 'still ongoing' – Ahli United Bank, the Bahraini lender, and Kuwait Finance House (KFH) are still in discussions for a potential merger, which would create a new Islamic entity with $92bn in combined assets. The two parties signed a preliminary and non-disclosure agreement to appoint banks to undertake valuations required to explore the possibility of a tie-up. “With reference to our earlier disclosures, please note that consultations are still under way regarding the valuation results of the studies prepared by HSBC and Credit Suisse to recommend and determine a fair share exchange ratio,” Ahli United Bank stated to Boursa Kuwait. (GulfBase.com)  At least three companies to list in Oman next year – At least three companies are expected to list on the Omani stock exchange next year, according to Director General of Muscat Securities Market, Ahmed Saleh Al Marhoon. Marhoon, speaking at a conference in Abu Dhabi, said one of the firms expected to list in 2019 is a power generating company, but he did not name it. Government bonds and Sukuk will also be listed next year, he added. (Reuters)  Oman to increase its LNG production capacity by 10%, joining wave of expansions – Oman will increase its liquefied natural gas (LNG) production capacity by 10% over the next four years, joining a wave of expansions to meet rising demand. Capacity will be increased to 11.4mn metric tons a year by 2022, Harib al- Kitani, CEO of Oman Liquefied Natural Gas, said. The expansion will be achieved by debottlenecking existing plants, he said. Global LNG demand is expected to rise by more than a third over the next decade to 416mn tons a year, according to Bloomberg NEF. Driven by rising Chinese imports and new destinations like Vietnam and Pakistan, gas producers from Qatar, Australia, Africa and the US are boosting output to capture a bigger share of the market. Oman has not used more than 85% of its annual 10.4mn ton LNG capacity over the past five years, according to Oman LNG, which operates the country’s three plants that liquefy gas for export. Production fell to 75% of capacity in some years as domestic natural gas demand for power generation and industrial uses surged, Kitani said. (Gulf- Times.com)  Petroleum Development Oman awards Marubeni a contract for 100MW solar plant – Petroleum Development Oman (PDO) awarded Marubeni a contract for 100MW solar plant. Contract was awarded for a photovoltaic plant to the group of Omani- Japanese companies, which includes Oman Gas and Marubeni, government-run Oman News Agency reported. (Bloomberg)  AUB's net profit rises to $170.8mn in 3Q2018 – Ahli United Bank (AUB) recorded net profit of $170.8mn in 3Q2018 as compared to $157.4mn in 3Q2017. Net interest income came in at $241.2mn as compared to $219.1mn in 3Q2017. Operating income came in at $294.6mn as compared to $277.4mn in 3Q2017. Total assets stood at $35.5bn at the end of September 30, 2018 as compared to $33.2bn at the end of December 31, 2017. Loans and advances stood at $19.8bn, while customers’ deposits stood at $24.7bn at the end of September 30, 2018. EPS came in at $0.021 in 3Q2018 as compared to $0.020 in 3Q2017. (Bahrain Bourse)  Bahrain sells BHD70mn 91-day bills – Bahrain sold BHD70mn of bills due January 30, 2019. Investors offered to buy 1.2 times the amount of securities sold. The bills were sold at a price of 98.934, having a yield of 4.26% and will settle on October 31. (Bloomberg)  Alba signs long-term agreement with Fluorsid – Aluminium Bahrain (Alba) announced that it has secured a long-term agreement with Fluorsid, a leading producer of fluorochemicals based in Italy, for the supply of smelter grade Aluminium Fluoride (ALF3). The agreement comes as part of Alba’s Line 6 Expansion Plan, which will make it the world’s largest smelter with a total production of 1.5mn metric tons with the ramp-up of Line 6. (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 0.6% 0.5% (0.0%) (0.3%) (0.6%) (0.5%) (0.4%) (0.8%) (0.4%) 0.0% 0.4% 0.8% SaudiArabia Qatar Kuwait Bahrain Oman AbuDhabi Dubai Asset/Currency Performance Close ($) 1D% WTD% YTD% Global Indices Performance Close 1D%* WTD%* YTD%* Gold/Ounce 1,229.40 (0.3) (0.3) (5.7) MSCI World Index 1,975.70 (0.3) (0.3) (6.1) Silver/Ounce 14.46 (1.6) (1.6) (14.7) DJ Industrial 24,442.92 (1.0) (1.0) (1.1) Crude Oil (Brent)/Barrel (FM Future) 77.34 (0.4) (0.4) 15.7 S&P 500 2,641.25 (0.7) (0.7) (1.2) Crude Oil (WTI)/Barrel (FM Future) 67.04 (0.8) (0.8) 11.0 NASDAQ 100 7,050.29 (1.6) (1.6) 2.1 Natural Gas (Henry Hub)/MMBtu 3.22 (1.5) (1.5) 4.2 STOXX 600 355.51 0.8 0.8 (13.5) LPG Propane (Arab Gulf)/Ton 86.75 1.3 1.3 (12.4) DAX 11,335.48 1.1 1.1 (16.9) LPG Butane (Arab Gulf)/Ton 91.25 1.4 1.4 (15.9) FTSE 100 7,026.32 1.0 1.0 (13.5) Euro 1.14 (0.3) (0.3) (5.3) CAC 40 4,989.35 0.4 0.4 (11.0) Yen 112.37 0.4 0.4 (0.3) Nikkei 21,149.80 (0.6) (0.6) (7.0) GBP 1.28 (0.3) (0.3) (5.3) MSCI EM 934.80 (0.5) (0.5) (19.3) CHF 1.00 (0.5) (0.5) (2.7) SHANGHAI SE Composite 2,542.10 (2.4) (2.4) (28.2) AUD 0.71 (0.5) (0.5) (9.7) HANG SENG 24,812.04 0.3 0.3 (17.4) USD Index 96.58 0.2 0.2 4.8 BSE SENSEX 34,067.40 1.6 1.6 (13.1) RUB 65.84 0.2 0.2 14.3 Bovespa 83,796.71 (2.6) (2.6) (1.7) BRL 0.27 (2.1) (2.1) (11.0) RTS 1,112.61 1.3 1.3 (3.6) 75.9 74.4 73.4

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