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QNBFS Daily Market Report September 30, 2018

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The QSE Index rose 0.6% to close at 9,784.3

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QNBFS Daily Market Report September 30, 2018

  1. 1. Page 1 of 8 QSE Intra-Day Movement Qatar Commentary The QSE Index rose 0.6% to close at 9,784.3. Gains were led by the Banks & Financial Services and Consumer Goods & Services indices, gaining 1.3% and 0.7%, respectively. Top gainers were Qatar Cinema & Film Distribution Company and Widam Food Company, rising 10.0% and 3.5%, respectively. Among the top losers, Qatar Gas Transport Company Limited and Medicare Group were down 1.9% each. GCC Commentary Saudi Arabia: The TASI Index rose 0.1% to close at 7,898.7. Gains were led by the Consumer Serv. and Health Care Equip. indices, rising 3.8% and 1.9%, respectively. Tabuk Cement Co. rose 6.5%, while Al Tayyar Travel Group Holding was up 6.2%. Dubai: The DFM General Index gained 1.8% to close at 2,825.8. The Banks index rose 3.3%, while the Real Estate & Const. index gained 1.6%. Takaful Emarat rose 7.1%, while Emirates NBD was up 6.1%. Abu Dhabi: The ADX General Index rose 0.4% to close at 4,947.9. The Telecom. index gained 3.7%, while the Services index rose 2.9%. Ras Al Khaimah White Cement gained 14.5%, while Abu Dhabi National Hotels was up 6.9%. Kuwait: The Kuwait Main Market Index rose 0.1% to close at 4,762.0. The Oil & Gas index gained 1.1%, while Basic Materials index rose 0.9%. Asiya Capital Investments Company gained 9.9%, while Senergy Holding Company was up 9.6%. Oman: The MSM 30 Index rose 0.5% to close at 4,523.8. The Financial index gained 0.9%, while the other indices ended flat or in red. Ominvest rose 3.5%, while Oman National Engine. Invt. was up 3.0%. Bahrain: The BHB Index fell 0.1% to close at 1,348.6. The Industrial index declined 0.8%, while the Commercial Banks index fell 0.1%. Al Salam Bank-Bahrain declined 2.0%, while Aluminium Bahrain was down 0.8%. QSE Top Gainers Close* 1D% Vol. ‘000 YTD% Qatar Cinema & Film Distribution 16.34 10.0 0.1 (34.6) Widam Food Company 74.97 3.5 44.2 20.0 Qatar Industrial Manufacturing Co 42.44 3.0 1.5 (2.9) Gulf International Services 18.50 2.8 231.5 4.5 Qatar Islamic Bank 140.00 2.2 304.6 44.3 QSE Top Volume Trades Close* 1D% Vol. ‘000 YTD% Doha Bank 21.00 0.2 882.3 (26.3) Qatar Insurance Company 38.00 0.2 641.8 (16.0) Qatar First Bank 5.00 (0.4) 531.1 (23.4) Ezdan Holding Group 10.60 1.0 475.1 (12.3) Qatar Gas Transport Company Ltd. 17.17 (1.9) 425.1 6.6 Market Indicators 27 Sep 18 26 Sep 18 %Chg. Value Traded (QR mn) 307.1 298.0 3.1 Exch. Market Cap. (QR mn) 546,657.9 542,322.7 0.8 Volume (mn) 6.9 8.0 (13.6) Number of Transactions 4,499 4,651 (3.3) Companies Traded 42 40 5.0 Market Breadth 23:18 16:23 – Market Indices Close 1D% WTD% YTD% TTM P/E Total Return 17,238.86 0.6 0.2 20.6 14.5 All Share Index 2,890.18 0.7 0.4 17.8 15.0 Banks 3,522.24 1.3 0.8 31.3 14.3 Industrials 3,171.79 0.6 0.7 21.1 15.7 Transportation 2,016.48 (1.0) (3.5) 14.1 12.6 Real Estate 1,855.33 0.4 (0.2) (3.1) 15.7 Insurance 3,168.80 0.1 (3.8) (8.9) 29.6 Telecoms 971.72 (0.7) 0.2 (11.6) 38.1 Consumer 6,774.62 0.7 4.4 36.5 14.7 Al Rayan Islamic Index 3,786.79 0.1 (0.3) 10.7 16.4 GCC Top Gainers ## Exchange Close # 1D% Vol. ‘000 YTD% Al Tayyar Travel Group Saudi Arabia 23.10 6.2 4,012.6 (14.5) Mouwasat Med. Serv. Co. Saudi Arabia 84.20 5.5 165.6 11.2 Yanbu Cement Co. Saudi Arabia 21.38 5.2 363.6 (36.8) Saudi Cement Co. Saudi Arabia 43.85 3.9 38.9 (7.5) Emirates Telecom. Group Abu Dhabi 16.70 3.7 2,510.4 (4.6) GCC Top Losers ## Exchange Close # 1D% Vol. ‘000 YTD% Taiba Holding Co. Saudi Arabia 28.90 (2.9) 204.0 (16.9) Nat. Shipping Company. Saudi Arabia 32.90 (2.2) 3,260.7 4.5 Rabigh Refining & Petro. Saudi Arabia 22.74 (2.2) 720.3 38.3 Saudi Kayan Petrochem. Saudi Arabia 16.46 (2.1) 11,312.8 54.1 Mobile Telecom. Co. Saudi Arabia 6.09 (2.1) 1,174.1 (16.7) 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% Qatar Gas Transport Co. Ltd. 17.17 (1.9) 425.1 6.6 Medicare Group 65.50 (1.9) 61.9 (6.2) Dlala Brokerage & Inv. Holding 11.81 (1.6) 40.6 (19.7) Zad Holding Company 101.91 (1.3) 4.8 38.4 Mazaya Qatar Real Estate Dev. 6.70 (0.9) 93.7 (25.6) QSE Top Value Trades Close* 1D% Val. ‘000 YTD% QNB Group 177.00 1.7 49,715.0 40.5 Qatar Islamic Bank 140.00 2.2 42,542.9 44.3 Qatar Fuel Company 162.00 1.3 37,507.4 58.7 Qatar Insurance Company 38.00 0.2 24,375.2 (16.0) Industries Qatar 124.70 0.6 19,781.0 28.6 Source: Bloomberg (* in QR) Regional Indices Close 1D% WTD% MTD% YTD% Exch. Val. Traded ($ mn) Exchange Mkt. Cap. ($ mn) P/E** P/B** Dividend Yield Qatar* 9,784.31 0.6 0.2 (1.0) 14.8 84.02 150,166.9 14.5 1.5 4.5 Dubai 2,825.76 1.8 2.2 (0.5) (16.2) 93.70 100,522.2 7.5 1.1 6.0 Abu Dhabi 4,947.92 0.4 1.3 (0.8) 12.5 86.73 134,057.0 13.1 1.5 4.8 Saudi Arabia 7,898.68 0.1 1.7 (0.6) 9.3 908.33 500,097.3 17.3 1.8 3.6 Kuwait 4,762.03 0.1 0.1 (2.8) (1.4) 69.42 32,657.1 14.7 0.9 4.4 Oman 4,523.82 0.5 0.6 2.4 (11.3) 12.66 19,460.1 11.1 0.8 6.0 Bahrain 1,348.60 (0.1) 0.6 0.8 1.3 19.04 20,708.1 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) 9,650 9,700 9,750 9,800 9,850 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 0.6% to close at 9,784.3. The Banks & Financial Services and Consumer Goods & Services 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.  Qatar Cinema & Film Distribution Company and Widam Food Company were the top gainers, rising 10.0% and 3.5%, respectively. Among the top losers, Qatar Gas Transport Company Limited and Medicare Group were down 1.9%.  Volume of shares traded on Thursday fell by 13.6% to 6.9mn from 8.0mn on Wednesday. However, as compared to the 30-day moving average of 6.0mn, volume for the day was 15.8% higher. Doha Bank and Qatar Insurance Company were the most active stocks, contributing 12.7% and 9.3% to the total volume, respectively. Source: Qatar Stock Exchange (* as a % of traded value) Global Economic Data and Earnings Calendar Global Economic Data Date Market Source Indicator Period Actual Consensus Previous 09/27 US Department of Labor Initial Jobless Claims 22-September 214k 210k 202k 09/27 US Department of Labor Continuing Claims 15-September 1,661k 1,678k 1,645k 09/27 US Bloomberg Bloomberg Consumer Comfort 23-September 61.2 – 60.2 09/28 UK GfK NOP (UK) GfK Consumer Confidence September -9 -8 -7 09/28 UK UK Office for National Statist GDP QoQ 2Q2018 0.4% 0.4% 0.4% 09/28 UK UK Office for National Statist GDP YoY 2Q2018 1.2% 1.3% 1.3% 09/27 EU European Central Bank M3 Money Supply YoY August 3.5% 3.9% 4.0% 09/27 EU European Commission Economic Confidence September 110.9 111.2 111.6 09/27 EU European Commission Business Climate Indicator September 1.21 1.19 1.21 09/27 EU European Commission Industrial Confidence September 4.7 5.1 5.6 09/27 EU European Commission Services Confidence September 14.6 14.8 14.4 09/27 EU European Commission Consumer Confidence September -2.9 -2.9 -2.9 09/28 EU Eurostat CPI Core YoY September 0.9% 1.1% 1.0% 09/28 EU Eurostat CPI Estimate YoY September 2.1% 2.1% 2.0% 09/27 Germany GfK AG GfK Consumer Confidence October 10.6 10.5 10.5 09/27 Germany German Federal Statistical Office CPI MoM September 0.4% 0.1% 0.1% 09/27 Germany German Federal Statistical Office CPI YoY September 2.3% 2.0% 2.0% 09/28 France INSEE PPI MoM August 0.2% – 0.7% 09/28 France INSEE PPI YoY August 3.7% – 4.0% 09/28 France INSEE CPI MoM September -0.2% -0.2% 0.5% 09/28 France INSEE CPI YoY September 2.2% 2.3% 2.3% 09/28 Japan Ministry of Internal Affairs & Communication Jobless Rate August 2.4% 2.5% 2.5% 09/28 Japan Ministry of Economy Trade and Industry Industrial Production MoM August 0.7% 1.4% -0.1% 09/28 Japan Ministry of Economy Trade and Industry Industrial Production YoY August 0.6% 1.5% 2.2% 09/27 China National Bureau of Statistics Industrial Profits YoY August 9.2% – 16.2% 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 QNBK QNB Group 10-Oct-18 10 Due QIBK Qatar Islamic Bank 17-Oct-18 17 Due DHBK Doha Bank 17-Oct-18 17 Due UDCD United Development Company 17-Oct-18 17 Due ABQK Ahli Bank 21-Oct-18 21 Due QIGD Qatari Investors Group 21-Oct-18 21 Due KCBK Al Khalij Commercial Bank 23-Oct-18 23 Due CBQK The Commercial Bank 23-Oct-18 23 Due Source: QSE Overall Activity Buy %* Sell %* Net (QR) Qatari Individuals 18.83% 28.57% (29,908,024.25) Qatari Institutions 19.53% 39.69% (61,902,428.54) Qatari 38.36% 68.26% (91,810,452.79) GCC Individuals 0.42% 0.37% 130,105.19 GCC Institutions 1.03% 4.12% (9,476,313.77) GCC 1.45% 4.49% (9,346,208.58) Non-Qatari Individuals 5.22% 6.00% (2,375,191.17) Non-Qatari Institutions 54.96% 21.25% 103,531,852.54 Non-Qatari 60.18% 27.25% 101,156,661.37
  3. 3. Page 3 of 8 News Qatar  Qatar’s central bank raises deposit rate by 25bps – Qatar’s central bank announced it raised deposit rate by 25 basis points (bps) to 2.25%, according to the state news agency. The decision came after the US Federal Reserve raised its interest rates by 25bps. (Zawya)  QNB Group: Qatar’s headline inflation to remain muted for rest of 2018 – Qatar’s headline inflation will remain muted in the balance period of 2018 and average 0.5% for the year as a whole and rise to 1.9% in 2019, QNB Group stated. Over the last year, consumer price index (CPI) inflation has been buffeted by a number of cross currents with a now ebbing spike in food inflation (12.6% of the CPI basket) and higher energy costs (6.1% of the CPI) militating against rental deflation (a 21.9% weight), QNB Group noted in its ‘Qatar Economic Insight – September 2018’. The net result has been to leave headline inflation muted, it stated. The increased short-term costs associated with the blockade, such as setting up new trade routes and importing food from outside the region saw domestic food prices temporarily spike higher, the report stated. Food inflation jumped from -1.9% YoY in May 2017, to a peak of 5.8% YoY in January 2018, before subsiding to zero in June as the shock washes out, QNB Group noted. (Gulf-Times.com)  QP wins exploration rights for offshore block in Brazil with ExxonMobil – Qatar Petroleum (QP) has won exploration rights for an offshore block in Brazil, in partnership with ExxonMobil. The Qatari entity won the exploration rights for the Tita block as part of a consortium with its long-term partner ExxonMobil, who will be the operator with a 64% participating interest, while QP will hold the remaining 36% interest. The exploration blocks were offered as part of the Brazil Exploration PSC5 Bid Round, which covered four blocks in the prolific Santos/Campos basins. The relevant legal agreements, including the concession agreements are expected to be signed between the Brazilian authorities and the consortium members by the end of this year. (Gulf-Times.com)  MERS signs a MoU with Tekzen a Turkish corporation – Al Meera Consumer Goods Company (MERS) signed a Memorandum of Understanding (MoU) with Tekzen, a Turkish Corporation, to import non-food products. This collaboration will enable MERS to increase its non-food offerings to the Qatari market. (QSE)  MCCS announces its intention to file a buy-out offer followed by a squeeze-out on Gfi Informatique – Mannai Corporation (MCCS), which holds 96.60% of the share capital and voting rights of Gfi Informatique, announced its intention to file with the French financial markets authority (AMF) a buy-out offer followed by a squeeze-out for the remaining shares of Gfi Informatique at a price of EUR10.5 per share, which will be subject to the appraisal of an independent expert in accordance with applicable French regulation. Gfi Informatique's board of directors will issue a reasoned opinion on the contemplated offer on the basis of the report of an independent expert. In this context, Finexsi has been appointed by Gfi Informatique's board of directors as an independent expert to appraise the fairness of the financial conditions of the contemplated offer. The buy-out offer followed by a mandatory squeeze out will be subject to the AMF clearance and is expected to be filed in October 2018. MCCS is advised by Crédit Agricole Corporate and Investment Bank acting as exclusive financial advisor and Clifford Chance acting as legal advisor. Gfi Informatique is advised by Cohen Amir-Aslani acting as legal advisor. (QSE)  Qatar Chamber’s report: Qatar’s non-oil exports hit QR2.7bn in July – Qatar’s non-oil exports jumped 100.3% to reach QR2.66bn YoY in July 2018 and QR1.65bn or a 60.7% increase on MoM basis, according to Qatar Chamber’s latest report. The report was based on 3,843 certificates of origin issued in July 2018, by the chamber’s Research & Studies Department and Member Affairs Department to 60 international markets compared to 58 countries in the previous month. The report noted Sri Lanka was Qatar’s top non-oil exports destination in July with QR771.1mn or 29% of the total exports followed by Oman with QR446.8mn or 16.8%, Singapore with QR296.7mn or 11.2%, Hong Kong with QR 244.1mn or 9.2%, Turkey with QR112.3mn or 4.2%, followed by the Netherlands, Germany, India, the US, and Australia. Statistics in July showed that Qatar’s exports reached 60 destinations, including 13 Arab and GCC countries; 13 European countries, including Turkey; 16 Asian countries, excluding Arab countries; 13 African countries, excluding Arab countries; four countries in North and South America, and Australia. (Gulf-Times.com)  Qatar keen on dual listing its ETFs on US bourse Nasdaq – Qatar is keen on dual listing its exchange traded funds (ETFs), including the one that is considered as the largest Shari’ah- compliant one in the world, on the US bourse Nasdaq. "Qatar is looking forward to promoting cooperation to benefit from Nasdaq’s expertise in distributed ledger technology and to discussing coordination mechanisms in terms of the dual listing of ETFs," HE the Minister of Economy and Commerce Sheikh Ahmed bin Jassim bin Mohamed Al-Thani told Meyer Sandy Frucher, Vice Chairman of Nasdaq on the sidelines of Qatar's participation in the 73 rd United Nations general assembly. At present, Qatar has two ETFs: One conventional sponsored by Doha Bank and the other Islamic sponsored by Masraf Al Rayan, both of which doing well in terms of volume and turnover. (Gulf-Times.com)  Qatar free zones have competitive advantage, says Manateq’s CEO – World-class infrastructure coupled with incentives and legislative framework regulating foreign investments in Qatar, among other measures, have made the country’s free zones at par with those in the international community, according to Manateq’s CEO, Fahad Rashid Al-Kaabi. Speaking to reporters on the sidelines of a recently held exhibition in Doha, Al-Kaabi said Manateq sees “a lot of good opportunities” for Qatar to increase Foreign Direct Investment (FDI) inflow. “Qatar has the right infrastructure, we now have more flexibility in the system to attract more international companies and to compete with any other free zones in the world,” Al-Kaabi pointed out. Asked about the mix of industries under Manateq, Al-Kaabi said the company is mainly focusing on the downstream industry such as manufacturing facilities specializing in petrochemicals, aluminium, and steel. “We have different manufacturers. We’ve seen a lot of focus in steel structures, concrete supplies and ready mix. We have also seen an uptick in the automotive
  4. 4. Page 4 of 8 industry, which includes electric cars and spare parts,” Al-Kaabi said. He noted that Qatar is coordinating with other countries to ensure that the country not only supplies oil and gas, but also builds partnerships in the industrial sector and downstream industry. According to Al-Kaabi, Manateq is focused on delivering the right infrastructure for any industrial or logistics operations either by providing the right location or industrial requirements such as online registration. (Gulf-Times.com)  Workers' consent not needed for five percent exit permit – The Ministry of Administrative Development, Labor and Social Affairs (MADLSA) has affirmed that the employer has the complete right of determining five percent of their employees, who will need exit permit. It said that the employer does not need any consent or approval by the employees, while making lists of those five percent employees, who will require exit permit for leaving the country. (Peninsula Qatar)  New eco-friendly waterproofing products hit local market – ‘Doha Engineering Services Company (DESCO)’ has launched eco-friendly waterproofing products designed especially for desert like climate, at competitive prices in Qatar. “The new products are based on Supershield Crystalline Technology (SCT), which makes it different from other products available in the market,” Pietro Bertone, the Director-General of ‘Supershield Italia’, the partner of DESCO in Qatar said at the pavilion of the company in ‘The Big5 Qatar Exhibition’ held recently at Doha Exhibition and Convention Center (DECC). (Peninsula Qatar) International  US second-quarter GDP growth unrevised at 4.2% – US economic growth accelerated in the second quarter at its fastest pace in nearly four years as previously estimated, putting the economy on track to hit the Trump administration’s goal of 3% annual growth. Gross Domestic Product (GDP) increased at a 4.2% annualized rate, the Commerce Department stated in its third estimate of GDP growth for the April-June quarter. That was the fastest pace since the third quarter of 2014, and unchanged from the estimate published in August. The economy grew at a 2.2% pace in the January-March period. (Reuters)  US consumer spending rises, monthly inflation moderates – US consumer spending increased steadily in August, supporting expectations of solid economic growth in the third quarter, while a measure of underlying inflation remained at the Federal Reserve’s 2% target for a fourth straight month. Economists said report from the Commerce Department should allay fears of the economy overheating and likely keeps the US central bank on a gradual path of interest rate increases. The Fed raised rates for the third time this year and removed the reference to monetary policy remaining “accommodative.” The Commerce Department stated consumer spending, which accounts for more than two-thirds of US economic activity, rose 0.3% last month after an unrevised 0.4% gain in July. Spending last month was driven by outlays on healthcare, which offset a drop in motor vehicle purchases. August’s increase in consumer spending was in line with economists’ expectations. When adjusted for inflation, consumer spending rose 0.2% after climbing 0.3% in July. (Reuters)  UK firms cut investment as Brexit nears, current account gap widens – British companies cut their investment in the second quarter of 2018, when Brexit was less than a year away, and the country’s balance of payments shortfall grew more than expected, official data showed. The Office for National Statistics (ONS) confirmed a previous estimate that Britain’s overall economy grew by a quarterly 0.4% in the April-June period. But it lowered the annual growth rate in the second quarter to 1.2% from a previous estimate of 1.3%. It also cut the quarterly growth rate in the first three months of the year, when the country was hit by heavy snow, to 0.1% from 0.2%. Economic growth in the first half of 2018 was the weakest for a six-month period since the second half of 2011, the ONS stated. Sterling fell after the data and briefly touched its lowest level in nearly two weeks against the US Dollar. (Reuters)  Dip in underlying Eurozone’s inflation likely to worry ECB – Underlying price pressures dipped unexpectedly in the Eurozone’s 19 countries this month, data that is likely to increase concern at European Central Bank (ECB), as it prepares to curb economic stimulus measures. With much of its firepower exhausted, the ECB is slowly withdrawing support, hoping it has done enough to kickstart growth and inflation, even if price pressures remain relatively muted. Despite consumer prices picking up as expected to 2.1% in September, from 2% a month ago, the rate excluding the cost of food and energy fell to 1.1% from 1.2%, according to the Eurostat data. This not only missed market projections, but also appears to challenge the ECB’s own view that core inflation will rise toward the end of the year, finally moving higher after being stuck near 1% since the middle of 2015. (Reuters)  Germany’s unemployment rate falls to record low in September – Germany’s jobless numbers fell more than expected in September, pushing down the unemployment rate to its lowest level since German reunification in 1990, data showed. The Federal Labor Office stated the seasonally adjusted jobless total fell by 23,000 to 2.303mn. That compared with an expected drop of 9,000 forecast in a Reuters poll. The unemployment rate eased to 5.1% from 5.2% in August, reflecting the strength of a labor market that has become the anchor of a consumer-led upswing. (Reuters)  French consumer spending stronger than expected in August – French consumer spending rebounded more than expected in August, due to strong car purchases, according to the INSEE statistics agency. Consumer spending rose 0.8% in August from July, ahead of economists’ average expectations for an increase of 0.3% in a Reuters poll that had estimates ranging from -0.3% to 0.8%. Spending on manufactured goods rose 1.2%, lifted by a jump of 6.9% in transport equipment, essentially cars. (Reuters)  QNB Group: Current account balances are deteriorating across ASEAN-5 – Current account balances are deteriorating across the ASEAN-5, but their external accounts are healthy, QNB Group stated in an economic commentary. The current account is a key concept in macroeconomic analysis. It stands for exports and imports of currently produced goods, services, and income flows to and from foreign residents. The balance therefore captures the extent to which a country is either accumulating net foreign assets or issuing foreign liabilities, i.e. if they are a net borrower or lender to the rest of the world. The
  5. 5. Page 5 of 8 current account balance is usually dominated by trade in goods and services, but also includes so-called ‘primary and secondary’ incomes. The first tends to be spearheaded by investment income, while the latter by remittances from workers residing overseas. Indonesia, Thailand, Malaysia, the Philippines and Vietnam – who are referred to in aggregate as ‘Asean-5’ – are a “mixed bag” in terms of their current account positions, QNB Group stated. Thailand, Malaysia and Vietnam are persistent net lenders to the rest of the world. In 2017, their current account surpluses as a percentage of GDP amounted to 10.8%, 3% and 4.1%, respectively. (Gulf-Times.com)  Japan’s August manufacturing rebound fails to impress as trade risks mount – Japan’s industrial output recovered only modestly in August from a recent string of natural disasters, and economists expect lackluster growth after electronics output tumbled by the most in 2-1/2 years. Further clouding the outlook is the chance that Japan will shift more vehicle production to US to meet the US President Donald Trump’s demands to lower his country’s trade deficit and create more jobs. Industrial output in the third quarter is likely to contract slightly, economists said. This decline should be temporary, because Japan’s domestic demand remains firm, but external risks to the outlook are growing. Trade ministry data showed factory output rose 0.7% in August from the previous month, less than economists’ median estimate of a 1.5% rise and following 0.2% decline in the previous month. Manufacturers surveyed by the trade ministry expect output to rise 2.7% in September and 1.7% in October. Output rose in August due to a 5.2% increase in auto production and a 5.6% increase in the production of gear used to make semiconductors and flat-panel displays. (Reuters)  China's total tax cut to exceed ¥1.3tn this year, above target – The total value of China’s tax cuts this year was expected to exceed ¥1.3tn ($189.28bn), higher than the target set earlier this year, the nation’s Finance Minister said. China is studying measures to further cut taxes and reduce fees, as part of its fiscal measures to ease economic headwinds amid the Sino-US trade tensions, Finance Minister Liu Kun said. Liu said China’s total cuts in taxes and fees will be more than ¥1.1tn this year, in an interview with Reuters in August. (Reuters) Regional  Reuters poll: Oil to rise as Iran sanctions outweigh demand risks from trade wars – Oil prices are likely to climb continuously into next year, as concerns over drops in supply from the likes of Iran and Venezuela outweigh any worry that global trade disputes could undermine demand, a Reuters poll showed. A survey of 50 economists and analysts forecast Brent crude to average $73.48 a barrel in 2018, up from the $72.71 forecast in August and the $72.68 average so far this year. Brent was forecast to average $73.75 in 2019. This is the highest projection for the benchmark for both 2018 and 2019 in the polls this year. (Reuters)  Gulf bonds see rescue from worst year in ten as oil rises – Gulf bonds, which were headed for their worst year since the financial crisis, may recover some of their losses in the last quarter after crude climbed to a four-year high and they were added to a key index. Oil, the life-blood of most Gulf economies, rose above $82 a barrel last week, the highest since November 2014, and some traders are betting it will advance to $100 as US sanctions on Iran curb supply. Gains in oil will likely filter through to bond market gradually. “The strength in oil is still isn’t totally reflected in the market because of the significant supply pipeline that resumed after the summer, and is expected to continue until early December,” said Zeina Rizk, a Director of fixed income asset management at Arqaam Capital Ltd. “If we see currency volatility in emerging markets, especially with oil being where it is, the GCC is better off compared to the rest of EM given that the currency is pegged.” Gulf Arab debt will also get a boost after JPMorgan Chase & Co stated Qatar, Saudi Arabia, the UAE, Kuwait and Bahrain will become eligible for inclusion in its emerging-market bonds indices from the end of January, potentially attracting billions of Dollars in passive inflows. (Gulf-Times.com)  Saudi Arabia’s current account surplus at $19,181mn in 2Q2018 – Saudi Arabia’s current account surplus stood at $19,181mn in 2Q2018 versus deficit of $5,375mn in same period year ago. Financial account surplus came in at $14,852mn versus deficit of $3,662mn in same period year ago. Net change in reserve assets increased to $13,012mn versus a decrease of $6,720mn in same period year ago. Saudi Arabian Monetary Authority’s net foreign assets rose to SR1,884bn in August 2018 compared with SR1,852bn in July 2018 and SR1,800bn in August 2017. (Bloomberg)  EIA: US crude imports from Saudi Arabia highest in more than a year – US refiners received 27.1mn barrels of Saudi Arabian crude in July, the most since June 2017, according to EIA’s Petroleum Supply Monthly report. (Bloomberg)  Saudi Arabia’s healthcare market needs $23.6bn-$37.3bn investment – The healthcare market in Saudi Arabia requires an estimated $23.6bn-$37.3bn new investment as the population grows at a rate of 2.65% per annum, Colliers International stated in its latest white paper on the healthcare sector in the Kingdom. Saudi Arabia will require an additional 50,000 new beds (with current ratio of 2.23 beds per 1,000 population) and over 110,000 bed (with world average of 2.7 beds per 1,000 population) and almost 40,000 more doctors. Mansoor Ahmed, Director of Healthcare, Education and Public Private Partnerships (PPP) said, “One way of bridging the required investment is by creating more REIT funds. We estimate that that REIT funds in the Kingdom can unlock around $7.5bn to $8.5bn property value from the private sector, thereby playing a major role in extending the growth in the healthcare sector. In addition to the above, with the foreign investors ownership announcement by the Saudi Arabian General Investment Authority (SAGIA), in which foreign investors can have 100% ownership in healthcare and education sectors, which once implemented, is expected to boost private sector investment in the healthcare sector.” (GulfBase.com)  Saudi Arabia expects $11bn inflows from JP Morgan bond index entry – Saudi Arabia stated it expects inflows of around $11bn into the country’s debt as a result of the inclusion of its international bond issues in JP Morgan’s emerging markets bond indexes. The move is expected to attract a total of around $30bn of new foreign investment into their debt. The inclusion will be phased in between January 31 and September 30, 2019. The Saudi Arabian debt management office expects $11bn of
  6. 6. Page 6 of 8 inflows as a result of the entry into the indices; Saudi Arabia’s bonds will have 3.1% weight in the JP Morgan indices. “This will add support to the investor base as well as improve liquidity levels for the government’s issues as well the issuances of government-owned companies," the finance ministry stated. (GulfBase.com)  Saudi Aramco to boost oil capacity by 550,000 bpd in 4Q2018 – Saudi Aramco is expected to pick up an additional 550,000 bpd of oil production capacity from two major oil fields in the fourth quarter, so it would be able to increase production based on the demand from the market. If Saudi Aramco manages to bring that capacity online, it could give Saudi Arabia another half a million barrels of oil per day of spare capacity at a time when the oil market is expected to tighten with Iranian oil barrels coming off the market with the return of the US sanctions in early November, as reported by Reuters. (GulfBase.com)  Saudi Arabia in short-term oil fix, fears extra US supply next year – Saudi Arabia will quietly add extra oil to the market over the next couple of months to offset a drop in Iranian production but is worried it might need to limit output next year to balance global supply and demand as the US pumps more crude. The Kingdom, OPEC’s top producer, came under renewed pressure last week from US President, Donald Trump to cool oil prices ahead of a meeting in Algiers between a number of OPEC ministers and allies including Russia. Saudi Arabia and other producers discussed a possible production increase of about 500,000 bpd among the OPEC and non-OPEC allies. (Reuters)  Dubai allows global investors to start business remotely – Dubai Investment Development Agency (Dubai FDI) and the US-based Alliance Business Centres Network (ABCN) have partnered in a global-first move to enable investors globally to start their business in Dubai without having to be in the UAE. The partnership will enable investors overseas to use a network of 650 business centers spread across 85 cities in 45 countries to start a business in Dubai. The initiative is part of Dubai FDI's continuing efforts to attract sustainable foreign investment in line with the goals of the Dubai Plan 2021 and promote the Emirate as a competitive destination to do business. Dubai FDI seeks to attract international companies to Dubai and enable them grow and expand their business by leveraging a full range of professional services provided by ABCN. The partnership comes at a time when global investors and major multinationals are looking to capitalize on the prospects in Dubai, including its vibrant lifestyle, modern facilities, cultural diversity and openness, in addition to the highly competitive business environment. (GulfBase.com)  Mubadala plans bond transaction soon – Abu Dhabi state fund Mubadala is working on a bond transaction which could be announced as soon as next week, according to sources. Unlisted Mubadala, which has stakes in General Electric and private equity firm Carlyle Group, is working with a number of banks, including Bank of America Merrill Lynch, on the planned deal. (Reuter)  Abu Dhabi fund allocates AED3.2bn to support farm sector – Abu Dhabi Fund for Development (ADFD), the leading national entity for development aid, has allocated nearly AED3.2bn towards development projects in the agricultural and irrigation sectors in developing countries. Representing 7% of the total financial assistance contributed by the fund in supporting developing countries to date, this assistance has allowed several developing countries across the world to fulfill their sustainable development objectives as 40% of the world's population relies on agriculture for its livelihood. In its report marking Arab Agriculture Day, which is commemorated on December 27 every year, ADFD highlighted that the agricultural sector, which is closely associated with the growth of many other vital sectors such as health, education and environment, is one of the priority sectors identified by the United Nations towards achieving the sustainable development goals. (GulfBase.com)  Aldar Investments raises $500mn to refinance existing debt – Aldar Investments Properties, a fully owned subsidiary of Abu Dhabi’s developer Aldar Properties, raised $500mn through the sale of its debut Shair’ah-compliant bonds to refinance existing debt. The seven-year fixed rate US Dollar-denominated Sukuk was more than twice oversubscribed by bond investors. The Islamic bonds offer a profit rate of 4.75%, underpinned by Aldar Investments’ ‘Baa1’ credit rating. (GulfBase.com)  ADNOC awards AED3.16bn contract for gas development project – Abu Dhabi National Oil Company (ADNOC) awarded a major contract valued at AED3.16bn to boost gas supply and meet Abu Dhabi’s growing energy needs. A consortium of Spain’s Tecnicas Reunidas and Abu Dhabi’s Target Engineering Construction Company will design, supply and build a new gas plant on Das Island that will process 245mn cubic feet of gas per day for domestic use. The project will add 245mn cubic feet per day of associated gas to the 1.4bn cubic feet per day of offshore gas sent from Das Island to ADNOC Gas Processing’s Habshan gas facilities to be processed for use in power generation. (GulfBase.com)  Omani lenders said to hire UBS, HSBC as advisers for merger – Two of Oman’s biggest lenders have hired financial advisers to help with their talks to merge and create a bank with about $20bn in assets, according to sources. Bank Dhofar has appointed HSBC Holdings Plc (HSBC), while National Bank of Oman is working with UBS Group AG (UBS). The appointments were made last week and it’s likely that any deal could be mostly in stock. No final decisions have been made and the talks may not lead to an agreement, sources said. (Bloomberg)  NBO’s $500mn EMTN issuance oversubscribed – National Bank of Oman (NBO) has successfully issued five-year senior unsecured $500mn notes as part of its updated and up-sized $1.5bn Euro Medium-Term Note (EMTN) program. Unique to Omani financial institutions, the bank simultaneously undertook a liability management exercise to buy back $300mn face value of notes out of its existing $600mn five-year notes maturing in October 2019. The new issue of $500mn, which was oversubscribed by more than two times, was priced at five year Mid-swap plus 270bps. (GulfBase.com)  Bahrain-origin exports hit BHD184mn in August – The value of the Bahrain-origin exports hit BDH184mn during August as against BDH182mn for the same month of the previous year, marking an increase of 1%, Information and eGovernment Authority (iGA) stated in its latest foreign trade report. In regards to the re-exported field, the value of re-exports decreased by 26% as it reached BHD33mn during August 2018
  7. 7. Page 7 of 8 versus BHD44mn for the same month of the previous year. The value of the deficit of the trade balance, difference between exports and imports, reached BHD187mn during August 2018 versus BHD201mn for the same month of the previous year with decrease of 7%. Meanwhile, the value of imports decreased by 6% as it reached BHD404mn during August versus BHD428mn for the same month of the previous year, while the top ten countries account for 66% of the imports value and 34% for other countries. (GulfBase.com)  Bahrain plans to approve VAT, pension reform laws before election – Bahrain plans to get structural reforms through parliament before a November election, including the introduction of value-added tax (VAT) and changes to the pension system, according to sources. The reforms are part of efforts to fix public finances hit hard by the drop in oil prices which also pushed Bahrain’s dinar to its lowest in more than a decade. The move paves the way for an integrated program from Bahrain’s wealthier neighbors which have said they will support its economic reforms and fiscal stability. (Reuters)  Bahrain awaiting Gulf bailout package to repair its finances – Bahrain’s Gulf allies are weighing plans for a five year aid package to steady its finances and protect a currency peg seen as vital to regional economic stability, according to sources. The assistance would help Bahrain meet its financing needs over the period while it carries out fiscal reforms. The amount under negotiation is $10bn, though a final agreement has yet to be reached. The deal is taking shape after months of negotiations over the measures Bahrain would take to receive support from Saudi Arabia, the UAE and Kuwait. The package may include deposits and low-interest loans, a source added. (Gulf-Times.com)
  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 ( # Market was closed on September 28, 2018) Source: Bloomberg (*$ adjusted returns) 50.0 75.0 100.0 125.0 Aug-14 Aug-15 Aug-16 Aug-17 Aug-18 QSEIndex S&PPanArab S&PGCC 0.1% 0.6% 0.1% (0.1%) 0.5% 0.4% 1.8% (0.5%) 0.0% 0.5% 1.0% 1.5% 2.0% SaudiArabia Qatar Kuwait Bahrain Oman AbuDhabi Dubai Asset/Currency Performance Close ($) 1D% WTD% YTD% Global Indices Performance Close 1D%* WTD%* YTD%* Gold/Ounce 1,192.50 0.8 (0.5) (8.5) MSCI World Index 2,184.01 (0.2) (0.7) 3.8 Silver/Ounce 14.70 3.1 2.9 (13.2) DJ Industrial 26,458.31 0.1 (1.1) 7.0 Crude Oil (Brent)/Barrel (FM Future) 82.72 1.2 5.0 23.7 S&P 500 2,913.98 (0.0) (0.5) 9.0 Crude Oil (WTI)/Barrel (FM Future) 73.25 1.6 3.5 21.2 NASDAQ 100 8,046.35 0.1 0.7 16.6 Natural Gas (Henry Hub)/MMBtu# 3.13 0.0 3.8 (11.5) STOXX 600 383.18 (1.3) (1.4) (4.9) LPG Propane (Arab Gulf)/Ton 108.00 1.9 3.6 10.5 DAX 12,246.73 (2.0) (2.6) (8.4) LPG Butane (Arab Gulf)/Ton 129.00 5.7 11.1 22.1 FTSE 100 7,510.20 (0.9) (0.0) (5.8) Euro 1.16 (0.3) (1.2) (3.3) CAC 40 5,493.49 (1.3) (1.1) (0.1) Yen 113.70 0.3 1.0 0.9 Nikkei 24,120.04 1.3 0.2 5.1 GBP 1.30 (0.4) (0.3) (3.6) MSCI EM 1,047.91 (0.3) (0.3) (9.5) CHF 1.02 (0.5) (2.3) (0.7) SHANGHAI SE Composite 2,821.35 1.4 0.8 (19.2) AUD 0.72 0.2 (0.9) (7.5) HANG SENG 27,788.52 0.1 (0.8) (7.3) USD Index 95.13 0.3 1.0 3.3 BSE SENSEX 36,227.14 (0.2) (2.0) (6.4) RUB 65.55 (0.1) (1.3) 13.8 Bovespa 79,342.42 (1.5) 0.3 (14.6) BRL 0.25 (0.9) (0.0) (18.2) RTS 1,192.04 0.4 3.7 3.3 80.9 78.3 76.0

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