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QNBFS Daily Market Report September 11, 2018

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The QSE Index rose 1.2% to close at 9,889.6.

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QNBFS Daily Market Report September 11, 2018

  1. 1. Page 1 of 7 QSE Intra-Day Movement Qatar Commentary The QSE Index rose 1.2% to close at 9,889.6. Gains were led by the Insurance and Industrials indices, gaining 1.6% each. Top gainers were Zad Holding Company and Qatar Industrial Manufacturing Company, rising 2.8% and 2.5%, respectively. Among the top losers, Investment Holding Group fell 1.2%, while Qatar Oman Investment Company was down 0.7%. GCC Commentary Saudi Arabia: The TASI Index fell 0.3% to close at 7,706.3. Losses were led by the Consumer Services and Food & Staples Retailing indices, falling 2.5% and 2.0%, respectively. Saudi Cable Co fell 6.9%, while Tourism Enterprise Co was down 4.4%. Dubai: The DFM General Index gained 0.2% to close at 2,849.4. The Insurance index rose 5.6%, while the Invest. & Fin. Services index gained 1.1%. Islamic Arab Insurance Company rose 12.0%, while Deyaar Development was up 5.9%. Abu Dhabi: The ADX General Index rose 1.4% to close at 4,986.3. The Banks index gained 2.9%, while the Investment & Financial Services index rose 0.5%. National Bank of Ras Al Khaimah gained 6.1%, while Union National Bank was up 4.8%. Kuwait: The Kuwait Main market Index declined 0.6% to close at 4,771.8. The Oil & Gas index fell 2.4%, while the Real Estate index declined 1.3%. Ream Real Estate Company fell 34.4%, while National International Co. was down 13.9%. Oman: The MSM 30 Index rose 0.7% to close at 4,486.1. Gains were led by the Industrial and Services indices, rising 0.7% each. Oman Cables Industry rose 5.7%, while Almaha Ceramics was up 5.1%. Bahrain: The BHB Index fell 0.1% to close at 1,342.7. The Service index declined 0.6%, while the Commercial Banks index fell 0.4%. National Bank of Bahrain declined 1.7%, while Bahrain Telecommunication Company was down 1.6%. QSE Top Gainers Close* 1D% Vol. ‘000 YTD% Zad Holding Company 92.50 2.8 1.7 25.6 Qatar Industrial Manufacturing Co 41.00 2.5 74.4 (6.2) Al Khalij Commercial Bank 11.18 2.5 6.4 (21.3) Qatar Insurance Company 36.99 2.5 81.2 (18.2) Dlala Brokerage & Inv. Holding Co. 12.73 2.2 249.1 (13.4) QSE Top Volume Trades Close* 1D% Vol. ‘000 YTD% Investment Holding Group 5.81 (1.2) 1,297.8 (4.8) United Development Company 14.60 2.1 881.7 1.5 Vodafone Qatar 8.90 0.7 374.5 11.0 Barwa Real Estate Company 36.70 1.4 356.7 14.7 Masraf Al Rayan 37.35 0.7 293.9 (1.1) Market Indicators 10 Sep 18 09 Sep 18 %Chg. Value Traded (QR mn) 199.5 97.4 104.8 Exch. Market Cap. (QR mn) 546,625.2 539,431.5 1.3 Volume (mn) 5.9 3.4 73.4 Number of Transactions 3,562 1,780 100.1 Companies Traded 41 39 5.1 Market Breadth 31:5 13:22 – Market Indices Close 1D% WTD% YTD% TTM P/E Total Return 17,424.41 1.2 0.6 21.9 14.7 All Share Index 2,886.18 1.3 0.5 17.7 15.0 Banks 3,548.01 1.4 0.2 32.3 14.4 Industrials 3,184.15 1.6 1.5 21.5 15.8 Transportation 2,018.52 0.2 0.5 14.2 12.6 Real Estate 1,832.53 1.2 0.1 (4.3) 15.5 Insurance 3,154.72 1.6 1.2 (9.3) 29.5 Telecoms 993.69 0.1 0.0 (9.6) 39.0 Consumer 6,261.28 0.8 0.7 26.2 13.6 Al Rayan Islamic Index 3,832.78 1.0 0.7 12.0 16.6 GCC Top Gainers ## Exchange Close # 1D% Vol. ‘000 YTD% Saudi Arabian Fertilizer Saudi Arabia 78.60 6.2 938.7 20.7 Union National Bank Abu Dhabi 5.00 4.8 12,910.2 31.6 Oman Telecomm. Co. Oman 0.84 4.0 75.4 (30.6) Mouwasat Medical Serv. Saudi Arabia 82.30 3.5 458.4 8.7 Ahli Bank Oman 0.16 3.3 142.8 (5.9) GCC Top Losers ## Exchange Close # 1D% Vol. ‘000 YTD% National Bank of Oman Oman 0.18 (4.8) 60.2 (5.5) Nat. Industrialization Co Saudi Arabia 18.50 (3.6) 2,535.0 12.8 F. A. Al Hokair Saudi Arabia 23.02 (3.5) 305.8 (24.3) Alinma Bank Saudi Arabia 20.06 (3.1) 19,857.3 4.9 National Petrochem. Co. Saudi Arabia 26.30 (3.0) 141.6 41.9 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% Investment Holding Group 5.81 (1.2) 1,297.8 (4.8) Qatar Oman Investment Co. 6.01 (0.7) 12.3 (23.9) Qatar National Cement Company 56.00 (0.4) 1.4 (11.0) Ooredoo 69.75 (0.4) 183.7 (23.1) Qatari Investors Group 30.43 (0.2) 22.2 (16.9) QSE Top Value Trades Close* 1D% Val. ‘000 YTD% QNB Group 178.53 1.7 39,376.6 41.7 Qatar Islamic Bank 137.50 1.5 25,114.9 41.8 Industries Qatar 126.70 2.2 21,417.3 30.6 Barwa Real Estate Company 36.70 1.4 13,022.3 14.7 Ooredoo 69.75 (0.4) 12,881.6 (23.1) 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* 9,889.62 1.2 0.6 0.0 16.0 54.87 150,157.9 14.7 1.5 4.4 Dubai 2,849.41 0.2 0.8 0.3 (15.4) 125.12 101,605.7 7.6 1.1 5.9 Abu Dhabi 4,986.28 1.4 1.4 (0.0) 13.4 65.35 134,835.6 13.1 1.5 4.8 Saudi Arabia 7,706.34 (0.3) 0.2 (3.0) 6.6 680.23 489,429.6 16.9 1.7 3.7 Kuwait 4,771.75 (0.6) (1.9) (2.6) (1.2) 61.43 32,968.6 14.7 0.9 4.3 Oman 4,486.11 0.7 1.2 1.5 (12.0) 10.33 19,199.6 11.0 0.8 6.1 Bahrain 1,342.68 (0.1) 0.2 0.3 0.8 5.45 20,607.8 9.1 0.9 6.1 Source: Bloomberg, Qatar Stock Exchange, Tadawul, Muscat Securities Market and Dubai Financial Market (** TTM; * Value traded ($ mn) do not include special trades, if any) 9,750 9,800 9,850 9,900 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 1.2% to close at 9,889.6. The Insurance and Industrials indices led the gains. The index rose on the back of buying support from non-Qatari shareholders despite selling pressure from Qatari and GCC shareholders.  Zad Holding Company and Qatar Industrial Manufacturing Company were the top gainers, rising 2.8% and 2.5%, respectively. Among the top losers, Investment Holding Group fell 1.2%, while Qatar Oman Investment Company was down 0.7%.  Volume of shares traded on Monday rose by 73.4% to 5.9mn from 3.4mn on Sunday. However, as compared to the 30-day moving average of 6.4mn, volume for the day was 7.7% lower. Investment Holding Group and United Development Company were the most active stocks, contributing 22.0% and 14.9% to the total volume, respectively. Source: Qatar Stock Exchange (* as a % of traded value) Ratings and Global Economic Data Ratings Updates Company Agency Market Type* Old Rating New Rating Rating Change Outlook Outlook Change Invest bank Moody's Abu Dhabi ST-DCRR/ST-FCRR/ BCA/ABCA/LT-CRA/ ST-CRA/LT-LBD/ LT- FBD/LT-DCRR/ LT-FCRR P-3/P-3/ba3/ba3/ Baa3(cr)/P-3(cr)/ Ba1/Ba1/Baa3/ Baa3 NP/NP/b2/b2/ Ba2(cr)/NP(cr)/ Ba3/Ba3/Ba2/ Ba2  Negative – Source: News reports (* LT – Long Term, ST – Short Term, NP – Not Prime, DCRR – Domestic Counterparty Risk Rating, FCRR – Foreign Counterparty Risk Rating, BCA – Baseline Credit Assessment, ABCA – Adjusted Baseline Credit Assessment, CRA – Counterparty Risk Assessment, LBD – Local Bank Deposits FBD – Foreign Bank Deposits) Global Economic Data Date Market Source Indicator Period Actual Consensus Previous 09/10 UK UK Office for National Statistics Industrial Production MoM July 0.1% 0.2% 0.4% 09/10 UK UK Office for National Statistics Industrial Production YoY July 0.9% 1.1% 1.1% 09/10 UK UK Office for National Statistics Manufacturing Production MoM July -0.2% 0.2% 0.4% 09/10 UK UK Office for National Statistics Manufacturing Production YoY July 1.1% 1.4% 1.5% 09/10 UK UK Office for National Statistics GDP (MoM) July 0.3% 0.1% 0.1% 09/10 EU Sentix Behavioral Indices Sentix Investor Confidence September 12.0 14.3 14.7 09/10 Japan ESRI GDP SA QoQ 2Q2018 F 0.7% 0.7% 0.5% 09/10 China National Bureau of Statistics PPI YoY August 4.1% 4.0% 4.6% 09/10 China National Bureau of Statistics CPI YoY August 2.3% 2.1% 2.1% Source: Bloomberg (s.a. = seasonally adjusted; n.s.a. = non-seasonally adjusted; w.d.a. = working day adjusted) Overall Activity Buy %* Sell %* Net (QR) Qatari Individuals 22.77% 37.31% (29,007,775.46) Qatari Institutions 14.59% 32.06% (34,853,433.55) Qatari 37.36% 69.37% (63,861,209.01) GCC Individuals 0.30% 0.58% (571,866.75) GCC Institutions 1.28% 2.88% (3,206,808.36) GCC 1.58% 3.46% (3,778,675.11) Non-Qatari Individuals 7.58% 8.66% (2,153,267.30) Non-Qatari Institutions 53.48% 18.50% 69,793,151.42 Non-Qatari 61.06% 27.16% 67,639,884.12
  3. 3. Page 3 of 7 News Qatar  QSE urges German companies to take advantage of new, promising opportunities in Qatar – The Qatar Stock Exchange (QSE) has urged German companies to take advantage of the changed investment scenario in the country, especially in view of liberalizing foreign investments up to 100% in certain sectors. This was conveyed to them by QSE’s CEO, Rashid Bin Ali Al Mansoori at the recently concluded Qatar German Business and Investment Forum in Berlin. The bourse hopes that the forum will contribute to the promotion and showcasing of Qatari listed companies, and the promising investment opportunities offered to foreign investors taking advantage of the recent regulatory improvements permitting foreign investors to own shares in the Qatari market with limits up to 100% in some companies. The potential benefits of the new foreign investment rules include provisions for foreign investors to invest in banks and insurance through a decision of the cabinet, exemption from income tax and customs duties and that foreign investments are not subject to expropriation, according to Ernst and Young. The Ministry of Economy and Commerce (MEC) had stated that the revision to the existing laws is meant to attract foreign capital in all sectors of the national economy. The changes would also facilitate investors’ entry into the market and increase confidence in investment security. (Gulf-Times.com)  PR move to attract more capital and investment – The initiative to grant permanent residency to non-Qatari individuals will help increase investments and attract more capital, contributing to further economic growth in the country, while the State can also benefit from people with special competencies. This was highlighted by Brigadier Salem Saqr Al Muraikhi, Director of the Ministry of Interior’s (MoI) Legal Affairs Department, at a press conference held by the MoI to discuss various aspects of the recently issued Permanent Residency Law No 10 of 2018 and the procedures for granting the Permanent Residency (PR) card. The holder of the PR card shall have the right to invest in sectors of the national economy without a Qatari partner. The establishment of a company shall be in accordance with the law governing commercial companies, the statement notes. Besides, the PR cardholder may own real estate for housing and investment purposes in accordance with stipulations. (Gulf-Times.com)  Qatar begins regular LNG shipments to Bangladesh – Qatar has begun regular shipments of liquefied natural gas (LNG) to Bangladesh. An LNG cargo loaded over the weekend from Qatar’s RasGas production facility and will be the first of about three 140,000 cubic-meter cargoes to arrive each month at Moheshkhali, Petrobangla officials told Reuters. The Excellence, a floating storage and regasification unit (FSRU), arrived at Moheshkhali near Cox’s Bazar in April, but bad weather hampered its ability to dock properly and connect to shore. It offloaded the cargo it came with last month. The shipments will ramp up to 2.5mn tons a year, as agreed with Qatar, and have turned Bangladesh into the latest nation to join the fast-growing LNG importing club. (Peninsula Qatar)  Woqod to open 30 more fuel stations during the remainder of 2018 – Qatar Fuel Company (Woqod) will construct four fuel stations on the Orbital Highway and the new truck road connecting Mesaieed, Hamad Port, Dukhan, Lusail and Al- Khor and start operations of 30 fuel stations during the remainder of 2018. The company recently floated tenders for the construction of four fuel stations on the Orbital Highway and the new truck road, according to Woqod’s CEO, Saad Rashed Al Muhannadi. In selecting sites for the new fuel stations, Woqod stated it has coordinated with the Urban Planning Department at the Ministry of Municipality & Environment, Public Works Authority (Ashghal) and the Ministry of Transport and Communications. (Gulf-Times.com)  Qatar’s population shows 4.5% MoM rise in August – Qatar’s population showed 4.5% rise on August 31 compared to the figures recorded at the end of the previous month, according to the Ministry of Development Planning and Statistics (MDPS). The rise is apparently owing to the return of a considerably large number of residents from vacation. The population rose to 2,561,643 at the end of last month, from the year’s low of 2,450,285, recorded on July 31. Usually in the three months between June 1 and August 31, the country’s population shows a decline. However, the latest population figure is almost 117,000 lower than the highest of 2,731,910, recorded in May. The August figure is 4.7% more than the population of the corresponding period last year (2,446,328, in August 2017). As per the August figures, there were 1,931,077 males and 630,566 females in the country, while in July they were 1,903,888 and 546,397, respectively. (Gulf-Times.com)  Fall in number of building permits in August – A total of 493 building permits were issued in August by all municipalities, registering a decrease of 39% in comparison to July, according to buildings permits and building completion certificates data. (Gulf-Times.com)  Cardiff Council delegation visits Qatar to discuss trade and investment deals – A delegation from Cardiff Council visited Qatar to discuss trade and investment deals. The leader of Cardiff Council, Councilor Huw Thomas, who led the delegation, said, “The International Monetary Fund (IMF) has recently predicted that 90% of economic growth will come from outside the EU. As the uncertainty around Brexit grows, it is vitally important that Cardiff, as the capital city of Wales, looks to encourage more trade and investment from overseas and from emerging markets. This trip gave us the chance to tell Cardiff’s story to key investors in Qatar. Our city is booming and there are fantastic opportunities for global companies to come and invest here. We want to make sure Cardiff is in a good position to capture some of this investment.” (Gulf-Times.com)  NBK International signs MoU with Ehrhardt + Partner Group – NBK Group’s Chairman and CEO, Sheikh Nawaf Bin Nasser Al Thani and EPG President Marco Ehrhardt signed a memorandum of understanding (MoU) in the presence of Ambassador of Qatar in Germany Sheikh Saoud bin Abdulrahman Al-Thani; HE the Minister of Municipality and Environment Mohamed bin Abdullah Al-Rumaihi, and Qatar Businessmen Association’s Chairman, HE Sheikh Faisal bin Qassim Al-Thani on the sidelines of the ‘9th Qatar-Germany Business and Investment Forum’ held in Berlin, Germany. The MoU between Nasser Bin Khaled International, a subsidiary of
  4. 4. Page 4 of 7 Nasser Bin Khaled and Sons, and Germany’s Ehrhardt + Partner Group (EPG) was for the establishment of a $500mn state-of- the-art, fully-automated mega logistics park that would cater to the requirements of the growing logistics needs of Qatar and the region. (Gulf-Times.com) International  NIESR: UK economy on track for best quarter since late 2016 – Britain’s economy looks on track for its best quarter since late 2016, the National Institute of Economic and Social Research (NIESR) estimated. Gross domestic product looks likely to expand at a quarterly rate of 0.6% during the current July- September period, NIESR stated, which would be its best showing since the 4Q2016. Earlier on September 10, official data showed the economy expanded 0.6% during the three months to July, due to strong consumer spending, lifted by the World Cup and unusually warm weather. (Reuters)  Eurozone’s investor morale falls on emerging markets, trade angst – Investor morale in the Eurozone fell by more than expected in September, a survey showed, as concerns about emerging markets, political developments in Europe and trade tensions with the US weighed on sentiment. Sentix’s index for the Eurozone fell to 12.0 from 14.7 points in August. The Reuters consensus forecast was for a dip to 14.6. A sub-index measuring expectations fell to -8.8 from -5.8. A sub-index on current conditions fell to 35.0 from 37.3. (Reuters)  Greek consumer price inflation picks up to 0.9% in August – Greece's annual EU-harmonized inflation rate accelerated slightly in August, statistics service ELSTAT’s data showed. The reading was 0.9% from 0.8% in July. The data showed the headline consumer price index rose to 1.0% YoY, also picking up from 0.9% in the previous month. Greece had been in protracted deflation mode since March 2013 based on its headline index, as wage and pension cuts and a multi-year recession took a heavy toll on Greek household incomes. Deflation in the country hit its highest level in November 2013, when consumer prices registered a 2.9% YoY decline. The economy emerged from deflation in June 2016. (Reuters)  Reuters poll: China’s house prices to rise faster in 2018 in boost for cooling economy – Home prices and property investment in China are expected to rise more this year than first thought, as tight controls in big cities continue to push buyers into less- regulated smaller markets, a Reuters poll showed. The pick-up could offer much-needed support to China’s slowing economy as the US ratchets up tariffs on Chinese goods, though policy makers are likely to remain keenly aware of the risk of property bubbles. House prices in China – where a near-three-year real estate boom has spilled over from megacities to the hinterland - will rise 5% this year and 3.3% in 1H2019, according to the Reuters poll of 16 property analysts and economists. That outpaces the 1% gain seen in a previous poll in March and would only be marginally slower than the actual increase of 5.4% in 2017. Property investment is now expected to grow 8% this year, higher than the last poll’s 5%, as developers look to rebuild their housing inventories and as the construction of public housing accelerates. (Reuters) Regional  EY: Business in Saudi Arabia strikingly more optimistic now – Businesses in Saudi Arabia are significantly more optimistic about revenue growth and business opportunities than last year, as the Vision 2030 reforms set by Crown Prince Mohammed Bin Salman look to increase private sector participation. The EY Growth Barometer, an annual survey of entrepreneurs’ and middle-market leaders’ growth strategies, revealed that 33% of middle-market businesses in Saudi Arabia anticipate over 10% growth this year, and six in ten are targeting growth of 6-10%, a 24-percentage point jump compared to the results of last year’s survey. This year, regulation has emerged as a new force in stimulating innovation and revenue growth. In a major shift in opinion, over one third (35%) of Saudi Arabian respondents regard regulation as the top driver of innovation, up 28 percentage points compared to last year. (GulfBase.com)  Saudi Arabia’s sovereign fund picks Goldman Sachs, BAML and Michael Klein for SABIC sale – Saudi Arabia’s sovereign wealth fund has chosen Goldman Sachs, Bank of America Merrill Lynch (BAML) and Michael Klein as advisers on its planned sale of a stake in petrochemicals firm Saudi Basic Industries Corp (SABIC) to Saudi Aramco, according to sources. Citigroup has won the mandate to advise SABIC, sources said, while Reuters previously reported that JPMorgan and Morgan Stanley are advising Saudi Aramco. State-owned oil company, Saudi Aramco plans to buy a controlling stake in SABIC, possibly taking the sovereign Public Investment Fund’s (PIF) entire 70% holding. (Reuters)  Clariant, SABIC to deepen alliance as regulators back stake deal – Saudi Basic Industries Corp (SABIC) won regulatory approvals to buy a quarter of Swiss chemicals maker Clariant, cementing a partnership they hope will drive profit. The world’s fourth- largest chemicals maker stated in January that it was buying 24.99% stake from activist investors, rescuing Clariant from a hostile takeover threat. However, gaining a regulatory nod from countries including Mexico and Brazil has pushed back closure of SABIC’s stock purchase by nine months. But with this roadblock now cleared, Clariant’s CEO, Hariolf Kottmann plans a strategic update to tell shareholders how the combination will work. (Reuters)  Saudi Aramco’s joint venture in Malaysia seeks commitments for $9.7bn project financing – Malaysia’s Refinery and Petrochemical Integrated Development (RAPID) project, a venture between PETRONAS and Saudi Aramco, is seeking commitments from banks for a $9.7bn, 15-year loan, according to sources. Banks have already responded to an initial request for proposal and are required to respond by the end of this week with revised proposals, mainly around pricing. The new borrowing comprises three tranches: an export credit agency facility, an ECA-covered portion and an uncovered commercial piece of around $3.08bn. ECAs from Japan, South Korean and Europe are expected to be involved. The uncovered commercial tranche will carry different interest margins tied to completion of the project. The pre-completion period is expected to be two years, during which Petronas and Saudi Aramco will provide guarantees, and the all-in pricing is likely to be around 80 basis points (bps) over the London Interbank Offered Rate (LIBOR), LPC reported. After the project is completed, guarantees will fall away and the pricing will increase to around 150bps. An $8bn, 364-day bridge loan which RAPID completed in March paid
  5. 5. Page 5 of 7 similar all-in pricing based on an initial razor-thin interest margin of 40bps over LIBOR and fees. The bridge attracted 19 banks. (Reuters)  Saudi Automotive Services Company purchases additional shares in Middle East Battery Company – Saudi Automotive Services Company announced that on September 10, 2018 one of its subsidiary companies (Investments and Equipment Company) completed the purchase of 485 additional shares in Middle East Battery Company for a total of SR21,825,000 through one of the partners, the amount of this transaction will be paid in September 2018, through the company's own resources and banking facilities signed with a local bank, The company's share increased in Middle East Battery Company’s capital from 7.94% to 12.79% and thus the number of shares increased from 794 shares to 1,279 shares. (Tadawul)  The UAE is one of the largest commercial franchise markets in the region – The UAE is home to one of the largest and most vibrant commercial franchise markets in the MENA region with more than $18bn invested in the sector. The popularity of the sector coincides with a period of record growth in the country, as highlighted by the latest research findings issued at the end of 2017 by the Middle East and North Africa Franchise Association (MENAFA). With a record growth rate of more than 30%, the total trade rights of the UAE exceed $18bn out of a regional total of $30bn. Since its foundation, the UAE has witnessed significant economic growth through its steadfast and calculated steps towards long-term, sustainable growth. With international trademarks strengthening their presence within the regional market, local companies are being encouraged to conduct business in new markets outside of the UAE. (GulfBase.com)  Dubai Metro yields AED66bn for the economy in 8 years – Accumulated benefits of Dubai Metro in the period between its establishment in 2009 and end of 2016 reached AED66bn compared to accumulated capital and operational costs of about AED41bn, which implies the cost-benefit ratio reached 1.6 by the end of 2016, according to Dubai Roads and Transport Authority (RTA). RTA’s Director General and Chairman, Mattar Al Tayer said, “The infrastructure in general and roads in particular play a massive role in supporting economic, social and tourist activities, boosting the integration of the local economy, and enhancing GDP. The Dubai government is aware of the paramount importance of investment in infrastructure, and the government has therefore consistently maintained this policy. As a result, the Emirate’s investments in roads and transport infrastructure have touched AED100bn.” (GulfBase.com)  Moody's downgrades Invest bank's long-term deposit rating to ‘Ba3’; ‘Negative’ outlook – Moody's Investors Service (Moody's) downgraded Invest bank's long-term deposit ratings to ‘Ba3’ from ‘Ba1’, following the two-notch downgrade of the bank's baseline credit assessment (BCA) and adjusted BCA to ‘b2’ from ‘ba3’. Moody's also downgraded the long-term and the short- term Counterparty Risk Rating to ‘Ba2/Not Prime’ from ‘Baa3/P-3’. Moody's downgraded the long-term and the short- term Counterparty Risk Assessment to ‘Ba2(cr)/Not prime(cr)’ from ‘Baa3(cr)/Prime-3(cr)’. Invest bank's long-term deposit ratings carry a ‘Negative’ outlook. The rating downgrade reflects the continued weakening in Invest bank's asset quality, profitability and capitalization during the first six months of 2018, owing to the bank's continued implementation of a more conservative classification approach, combined with continued high delinquencies amid soft market conditions. The ‘Negative’ outlook reflects the risk of further deterioration in the bank's asset quality, profitability and capitalization. (Bloomberg)  Abu Dhabi’s stock exchange aims to start futures trading next year – Abu Dhabi’s stock exchange is joining a race to introduce derivatives as Gulf bourses including Kuwait and Saudi Arabia put strategies in place to lure more investors. The Abu Dhabi Securities Exchange (ADX) plans to enable trading of futures contracts on single stocks in 2019, and they may eventually be available for the benchmark ADX General Index, it’s CEO, Rashed Al Blooshi said, without specifying any starting dates. (Bloomberg)  Aldar Properties hires banks for $750mn Sukuk refinancing – Aldar Properties hired banks to arrange a US Dollar- denominated Sukuk issue of at least $750mn, according to sources. The company has mandated JPMorgan, Standard Chartered, and First Abu Dhabi Bank for the debt sale. Other banks, including Dubai Islamic Bank, will also have a role in the deal, sources added. The issue will refinance a $750mn outstanding Sukuk due in December this year. The size of the transaction could increase, depending on demand. (Reuters)  Net income of Abu Dhabi banks came in AED16.6bn in 1H2018 – The net income of commercial and Islamic banks operating in the Emirate of Abu Dhabi amounted to AED16.6bn during 1H2018, a growth of 8.4% over the corresponding period last year. The increase comes in line with the growth recorded across the UAE banking sector according to the statistics issued by the Central Bank of the United Arab Emirates. The net profits of Abu Dhabi-based banks increased to AED10.4bn during 1H2018, up 7.2% over the same period in 2017. According to figures published by the Statistics Centre-Abu Dhabi, the net profits of commercial banks during 1H2018 reached AED16bn, an increase of 10.5% over the same period last year. The net investment income of banks operating in the UAE capital stood at AED2.5bn during 1H2018, a rise of 20% from AED2.1bn as compared to the same period in 2017. (GulfBase.com)  Abu Dhabi takes measures to support business – The Department of Economic Development-Abu Dhabi (DED) stated it had taken two decisions to improve the ease of doing business in Abu Dhabi and attract more investments. The first decision modified the calculation mechanism of the billboards fees whereby the issuance and renewal of all kinds of economic licenses will be charged a fixed fee of AED200. DED also exempted new licenses, whether commercial, industrial, professional, craft, construction and others, from the fees charged by the Centre of Waste Management-Abu Dhabi and the need to obtain a ‘No Objection Certificate’ for the first year. The second decision on exempting new licenses from the Centre of Waste Management-Abu Dhabi’s fees aims to support the government’s efforts to attract investments and the business sector by reducing the fees that are imposed on investors and businessmen during the economic project establishment phase. (GulfBase.com)
  6. 6. Page 6 of 7  State Street Corporation opens Abu Dhabi office, eyes regional growth – US financial services provider State Street Corporation opened a new office in Abu Dhabi, expanding in the UAE as it eyes growth prospects in the Middle East region. State Street Corporation, with $2.7tn in assets under management, has an office in Dubai, the regional financial hub for the last 26 years. Its new office will be in the Abu Dhabi Global Market (ADGM), a financial free zone. The office will serve Middle East clients in areas including global custody, accounting, risk and performance analytics and securities lending as well as multi-asset and active investment management. (Reuters)  Bank of America likely to get Abu Dhabi banks’ merger role – Abu Dhabi Commercial Bank will likely mandate Bank of America to advise it on talks with Union National Bank and privately-held Al Hilal Bank in a three-way deal. The US bank has yet to be formally hired, according to sources. More advisers could be appointed in coming days to help with the deal. (Bloomberg)  National Bank of Oman hires banks for new Dollar bond issue – National Bank of Oman mandated banks to arrange a series of fixed income investor meetings ahead of a potential five-year US Dollar-denominated bond sale. The Omani lender has hired Bank ABC, Citi, Crédit Agricole CIB, Emirates NBD Capital, First Abu Dhabi Bank, National Bank of Oman and Standard Chartered Bank as joint lead managers and bookrunners for the potential deal. Meetings with investors in Asia, the Middle East and Europe will begin on September 12. The bank has also announced a tender offer for its outstanding $600mn notes maturing in October 2019, with Citi and Crédit Agricole CIB appointed as global coordinators of the tender offer. (Reuters)  Oman’s health insurance sector grows 26% annually – Oman’s Capital Market Authority (CMA) will host the 12th Middle East Conference for Health Insurance during September 24-25, 2018, with a large number of international experts expected to be in attendance. The event is being held against a backdrop of robust growth in the health insurance sector, averaging 26% over the past five years. Furthermore, health insurance premiums account for 30% share of total insurance premiums collected so far this year – a trend that is expected to rise as Oman prepares to introduce compulsory health care insurance for the private sector, as well as for tourists and visitors. (GulfBase.com)  Bahrain SMEs 'need to improve accounting standards' – A total of 86% of Bahraini start-up small and medium enterprises (SMEs) do not work according to financial and accounting principles according to a recent study. The study, ‘The Reality of Entrepreneurship in Bahrain’, took place in the Kingdom and looked at 300 Bahraini entrepreneurs. Stradico Company’s CEO, Khalil Al Qahiri stressed that the possession of these institutions for accurate accounting lists is particularly important as Bahrain introduces VAT. He said, “According to the study, 95% of the SMEs lack clear financial audits due to lack of knowledge or to avoid costs, especially during the process of incorporation, such as small restaurants, Abaya shops and car garages.” (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, # Market closed on September 10, 2018) 50.0 75.0 100.0 125.0 Aug-14 Aug-15 Aug-16 Aug-17 Aug-18 QSEIndex S&P Pan Arab S&P GCC (0.3%) 1.2% (0.6%) (0.1%) 0.7% 1.4% 0.2% (0.8%) 0.0% 0.8% 1.6% SaudiArabia Qatar Kuwait Bahrain Oman AbuDhabi Dubai Asset/Currency Performance Close ($) 1D% WTD% YTD% Global Indices Performance Close 1D%* WTD%* YTD%* Gold/Ounce 1,195.86 (0.0) (0.0) (8.2) MSCI World Index# 2,137.60 0.0 0.0 1.6 Silver/Ounce 14.18 0.0 0.0 (16.3) DJ Industrial 25,857.07 (0.2) (0.2) 4.6 Crude Oil (Brent)/Barrel (FM Future) 77.33 0.7 0.7 15.6 S&P 500 2,877.13 0.2 0.2 7.6 Crude Oil (WTI)/Barrel (FM Future) 67.54 (0.3) (0.3) 11.8 NASDAQ 100 7,924.16 0.3 0.3 14.8 Natural Gas (Henry Hub)/MMBtu 2.90 0.7 0.7 (6.1) STOXX 600 375.51 0.8 0.8 (6.9) LPG Propane (Arab Gulf)/Ton 105.75 0.5 0.5 6.8 DAX 11,986.34 0.6 0.6 (10.5) LPG Butane (Arab Gulf)/Ton 114.25 0.6 0.6 5.3 FTSE 100 7,279.30 0.8 0.8 (8.8) Euro 1.16 0.4 0.4 (3.4) CAC 40 5,269.63 0.7 0.7 (4.3) Yen 111.13 0.1 0.1 (1.4) Nikkei 22,373.09 0.2 0.2 (0.4) GBP 1.30 0.8 0.8 (3.6) MSCI EM# 1,022.98 0.0 0.0 (11.7) CHF 1.03 (0.6) (0.6) (0.0) SHANGHAI SE Composite 2,669.49 (1.3) (1.3) (23.5) AUD 0.71 0.1 0.1 (8.9) HANG SENG 26,613.42 (1.3) (1.3) (11.5) USD Index 95.15 (0.2) (0.2) 3.3 BSE SENSEX 37,922.17 (2.0) (2.0) (2.0) RUB 70.56 0.9 0.9 22.5 Bovespa 76,436.35 0.8 0.8 (19.6) BRL 0.24 (0.6) (0.6) (18.9) RTS 1,043.46 (0.7) (0.7) (9.6) 79.9 77.8 76.8

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