Weekly Market Review. October 25 th, 2015 October 31 st, 2015

Transcription

1 Weekly Market Review October 25 th, 2015 October 31 st,

2 CONTENTS International Equity Markets GCC Equities Currencies Commodities Interest Rates Equity Markets - Top Most & Bottom Most Commodity Markets - Top Most & Bottom Most Page I 2

3 INTERNATIONAL EQUITY MARKETS US GDP expanded at 1.5% annual rate in 3Q2015 vs. climbing 3.9% in 2Q2015 as businesses cut back on inventories Consumer spending edged up 0.1% in Sep vs. rising 0.4% in Aug, the smallest gain in eight months Non-defense capital goods orders, excluding aircraft, slipped 0.3% in Sep after declining 1.6% in Aug Institute of Int. Finance said investors pumped $13.9bn in emerging markets in Oct, the 1 st monthly inflow since Jun Eurozone inflation stood flat in Oct after falling 0.1% YoY in Sep, maintaining pressure on the ECB for more easing Economic sentiment ticked up to in Oct from in Sep; defied expectations of a minor decline Ifo German business confidence index slipped to in Oct from in Sep as risks of global slowdown tool toll Unemployment fell by 5,000 in Oct, signaling German cos. are weathering an emerging market slowdown Italy s jobless rate unexpectedly fell to 11.8% in Sep from 11.9% in Aug; consumer confidence rose in Oct Britain s economy grew 0.5% in 3Q2015, below the 0.7% recorded in 2Q2015 due to a slump in construction S&P: Britain s AAA credit rating could be cut by as much as two notches if it leaves the European Union Japan s core consumer prices fell for a 2 nd month by 0.1% in the year to Sep, remaining distant from BoJ s 2% target Household spending slid 0.4% YoY in Sep in price-adjusted real terms. Economists had forecasted a rise Factory output rose 1.0% in Sep after 2 straight months of declines, eases pressure on BoJ for more aid Chinese industrial companies profit inched down 0.1% YoY in Sep 2015 while they dropped 1.7% YoY in 9M2015 IMF's Asia & Pacific Department Director said China could beat IMF s 2015 projection of 6.8% growth Brazil s planning and finance ministries expect $13.3bn primary budget deficit in 2015, said shortfall could be bigger FGV consumer confidence index slid to 75.7 in Oct vs in Sep, the lowest since series began in 2005 Chile s manufacturing grew 1.8% YoY in Sep, rising for only 3 rd time in 2015 as the nation struggles to revive growth South Korea's Sep industrial output far outperformed 0.4% gain forecast, as it rose 1.9% MoM (seasonally adjusted) Taiwan s GDP shrank 1.0% YoY in 3Q2015, the 1 st time since 2009 as exports slid due to a slowing Chinese economy S&P year performance Euro Stoxx year performance Last Close 5 Day % ; *Current YTD % P/E (2015) *Div. Yield S&P 500 2, DJI 17, Nasdaq Comp 5, Euro Stoxx FTSE 100 6, Dax 10, CAC 40 4, Nikkei , Hang Seng 22, Brazil - Bovespa 45, Russia - Micex 1, BSE Sensex 26, Shanghai Comp 3, Page I 3

4 GCC EQUITIES Etisalat Group s net income slid 8.6% YoY to AED1.95bn, top-line inched down 1.0% YoY to AED12.99bn. Meanwhile, the telecom group completed sale of its 85% shareholding in Zanzibar Telecom Ltd. Emirates NBD net profit improved 7.0% YoY to AED1.67bn in 3Q2015. Operating profit grew 6% YoY to AED1.65bn Dubai Islamic Bank s earnings surged 43.6% YoY to AED972.1mn. Net income gained 15.9% YoY to AED1.6bn Aramex said it expects to close acquisition deals worth around $150mn in the next two quarters Emaar Malls Group 3Q2015 net profit jumped 17.1% YoY to AED376mn. Revenue grew 12.0% YoY to AED728mn UAE-based water and wastewater project developer Metito secured an AED240mn loan from Dubai Islamic Bank Dubai Investments 3Q2015 total income rose 12.5% YoY to AED701mn. Earnings jumped 30.1% YoY to AED246mn Emirates Global Aluminium is reportedly in talks with banks to raise a $5bn loan to refinance debt Dubai Financial Market s net profit plunged 70.4% YoY to AED45.4mn as trading activity fell tracking lower oil Dubai s Majid Al Futtaim launched a $500mn, ten-year Sukuk; received orders in excess of $1.5bn from investors The National Shipping Company of Saudi Arabia will by two used VLCCs from DK Maritime worth $157mn Yanbu Aramco Sinopec Refining Co. Ltd. mulls selling shares to general public amid improving refining margins Tawuniya Insurance will provide insurance to the National Commercial Bank staff over 12 months for SAR133.3mn Kuwait-based Zain s bottom-line shrank to KWD38mn in 3Q2015 from KWD46mn in 3Q2014 Bank Dhofar and Bank Sohar appointed legal & financial consultants for carrying due diligence of their merger Ooredoo s net profit more than doubled to QAR755.8mn in 3Q2015 from QAR375.0mn in 3Q2014 Industries Qatar s net income dropped 25.2% YoY to QAR1.41bn as revenue declined 20.4% YoY to QAR1.22bn Qatar Investment Authority inked a JV with Brookfield Property Partners for developing $8.6bn project in New York Ahli United Bank s 3Q2015 bottom-line climbed 23.7% YoY to $140.9mn. Net operating income rose 12.9% YoY Bahrain Islamic Bank reduced its paid-up capital by approximately 15.34% from BHD94.91mn to BHD80.35mn Last Close 5 Day % YTD % P/E (2015) *Div. Yield Dubai 3, Abu Dhabi 4, Saudi Tadawul 7, Qatar Index 11, Kuwait Index 5, Oman MSM 30 5, Bahrain All Share 1, Egypt EGX 30 7, Istanbul 100 Index 79, ; *Current DFMGI 1 year performance Saudi Tadawul 1 year performance Page I 4

5 CURRENCIES The US dollar gained 0.11% since Oct 23 against euro as the Federal Reserve said this week it will consider raising interest rates in Dec 2015, following ECB President Mario Draghi s Oct 22 signal that his board may add stimulus Japanese yen moved 0.70% up against US dollar in the week after the Bank of Japan stood pat on monetary policy, disappointing some speculators who had bet the central bank would expand its already massive stimulus Chinese yuan appreciated 0.52% during the past five days as the central bank said it will consider a trial program in the Shanghai free trade zone allowing domestic individual investors to directly buy overseas assets Brazil s real strengthened 0.53% in the week amid speculation banks are selling dollars in an attempt to lower the central bank rate used in settling some financial contracts. The real also got a boost from data showing Brazil s nominal budget deficit stood at reais 77.3bn in Sep, less than the reais 78.6bn median forecast Russian ruble fell 2.54% during the week as the US Fed signaled it may raise interest rates as soon as Dec, stoking speculation the Bank of Russia will choose to protect its currency by limiting the scale of its own policy easing Australian dollar depreciated 1.10% this week, pressured by speculation the Reserve Bank of Australia might cut interest rates next week as 3Q2015 inflation came softer than expected, plus the risk of a US rate hike by 2015-end Last Close 5 Day % 1 Mth. % YTD % 1 Year % USD Index EUR/USD GBP/USD USD/JPY USD/CHF USD/CAD USD/BRL USD/RUB USD/INR USD/CNY USD/AUD Malaysian ringgit declined 1.5% this week to per US dollar as Fitch Ratings warning that Malaysia may miss its fiscal deficit reduction target added to concern higher US interest rates will spur more capital outflows EUR/USD 1 year performance GBP/USD 1 year performance Page I 5

6 COMMODITIES US & Brent crude futures gained 4.5% & 3.3% during the week, respectively, as data showed US oil rig count fell for a 9 th straight week to 578, the least since Jun 2010 while US oil output in Aug fell to a 3 rd lowest figure in 2015 Spot gold prices ended the week 1.92% lower on the chance the US Fed may still raise interest rates this year. Rising interest rates tend to weigh on gold because they lift the opportunity cost of holding non-yielding bullion CBoT wheat futures climbed 6.4% in the week ended Oct 30, recording its biggest weekly gain in four months on concerns over potential supply shortfalls amid unfavorable weather across key producing regions ICE cocoa futures gained 4.3% since Oct 23, supported by worries over the potential impact of dry weather that took place earlier in the growing season, in Ivory Coast and Ghana on main crop production LME nickel and zinc futures dropped 4.3% & 2.6%, respectively, during the past 5 trading days as investors realized that production cuts announced by Glencore earlier in Oct 2015 would take time to tighten the market Last Close 5 Day % 1 Mth. % YTD % 1 Year % Brent ICE WTI Nymex Gold Spot 1, Silver Spot Copper - CMX S&P GSCI Spot Index Baltic Dry Index CBoT soybeans futures slipped 1.3% this week as China snapped US soybean in recent deals and is expected to switch to South American beans when Brazil and Argentina harvest their crops early in Rains in Brazil will help farmers planting a soybean crop that is expected to produce a record 100mn tons LME aluminum futures fell 1.2% in the week on worries that China was likely to sell more aluminum onto world markets by offering its struggling smelters cheaper power prices to keep them operating WTI Crude 1 year performance GOLD 1 year performance Page I 6

7 INTEREST RATES The US Federal Reserve left its short-term interest rates at record lows of 0% to 0.25% on Oct 28. However, the central bank gave its clearest signal yet that a rate increase in Dec 2015 is on the table, which prompted investors to shed bondholding, leading to a 5.6 basis points (bps) rise in 10-year yield this week to 2.1% The Bank of Japan held rates and annual asset purchase at 80tn on Oct 30, preferring to preserve its dwindling policy options in the hope that economy can overcome the drag from China s slowdown without additional monetary support Russia s central bank left its benchmark rate, the one-week minimum auction repo rate, unchanged at 11% on Oct 30 for the second time in a row, stressing inflation risks above worries about a stagnant economy Sweden s national bank (the Riksbank) kept the nation s record low key interest rate at -0.35% on Oct 28. The Riksbank said it is expanding the country s bond buying program with a further kronor 65bn ($766mn) Mexico s central bank left its key rate at a record low of 3.0% on Oct 29, saying the growth outlook had worsened while inflation remained tame, but hinted they are prepared to raise borrowing costs once US Fed moves rates up Last Close 5 Day % 1 Mth. % YTD % 1 Year % USD-10yr USD-2yr Fed Funds Rate USD-3m Libor USD-6m Libor German-10yr UK-10yr Japan-10yr AED-3m EIBOR AED-6m EIBOR Colombia s central bank increased its benchmark policy rate by 50 bps to 5.25%, the most in more than a decade to curb the fast increase in consumer prices. Inflation accelerated to 5.35% in Sep, its fastest pace in over 6 years Tunisia s central bank cut the benchmark interest rate by 50 bps to 4.25% for the first time since 2011, in an attempt to revive economic growth after militant attacks took a toll on tourism US 10 year Generic Yield 1 year performance UK 10 year Generic Yield 1 year performance Page I 7

8 EQUITY MARKETS - TOP MOST & BOTTOM MOST WEEKLY YTD Ref Country Weekly Change Weekly Change (USD Adj.) 1 Argentina 9.99% 10.07% 2 Jamaica 5.89% 5.90% 3 Latvia 2.80% 2.68% 4 Belgium 2.23% 2.12% 5 Ukraine 2.07% 1.18% 6 Israel 1.83% 2.71% 7 Slovakia 1.65% 1.54% 8 Japan 1.37% 2.08% 9 Ghana 1.30% 2.10% 10 Romania 1.14% 1.02% Ref Country YTD Change YTD Change (USD Adj.) 1 Venezuela % % 2 Jamaica 71.94% 64.50% 3 Latvia 46.54% 33.31% 4 Argentina 45.25% 29.28% 5 Malta 30.27% 18.51% 6 Slovakia 29.74% 18.03% 7 Hungary 29.60% 20.17% 8 Denmark 25.99% 14.44% 9 Ireland 23.04% 11.94% 10 Italy 18.04% 7.39% Ref Country Weekly Change Weekly Change (USD Adj.) 1 Venezuela -8.49% -8.49% 2 Luxembourg -4.40% -4.51% 3 Indonesia -4.25% -4.70% 4 Abu Dhabi UAE -3.64% -3.64% 5 Brazil -3.63% -3.12% 6 Saudi Arabia -3.49% -3.50% 7 Russia -3.13% -3.13% 8 Canada -3.04% -2.40% 9 India -2.96% -3.61% 10 Nigeria -2.74% -2.73% Ref Country YTD Change YTD Change (USD Adj.) 1 Peru % % 2 Ukraine % % 3 Colombia % % 4 Egypt % % 5 Nigeria % % 6 Kenya % % 7 Greece % % 8 Indonesia % % 9 Saudi Arabia % % 10 Bulgaria % % Page I 8

9 COMMODITY MARKETS - TOP MOST & BOTTOM MOST WEEKLY YTD Ref Commodity Weekly Change 1 Wheat 6.42% 2 Gasoline 5.22% 3 WTI Crude 4.46% 4 Cocoa 4.29% 5 Heat Oil 4.28% 6 Brent Crude 3.27% 7 Gasoil 2.59% 8 Coffee 2.11% 9 Sugar 1.68% 10 Natural Gas 1.53% Ref Commodity YTD Pct Change 1 Cocoa 11.99% 2 Cotton 5.06% 3 Rough Rice 1.04% 4 Sugar 0.00% Ref Commodity Weekly Change 1 Lean Hogs -6.92% 2 Tin -4.79% 3 Nickel -4.33% 4 Rubber -4.10% 5 Lead -3.36% 6 Lumber -2.80% 7 Zinc -2.56% 8 Palladium -2.49% 9 Feeder Cattle -2.13% 10 Rough Rice -2.07% Ref Commodity YTD Pct Change 1 Nickel % 2 Steel Rebar % 3 Coffee % 4 Lean Hogs % 5 Rubber % 6 Lumber % 7 Tin % 8 Zinc % 9 Natural Gas % 10 Aluminium % Page I 9

10 IMPORTANT NOTICE This report was prepared by the Private Banking Unit of Mashreqbank psc ( Mashreq ) in the United Arab Emirates ( U.A.E. ). Mashreq is regulated by the Central Bank of the U.A.E. This report is provided for informational purposes and private circulation only and should not be construed as an offer to sell or a solicitation to buy any security or any other financial instrument or adopt any hedging, trading or investment strategy. Prior to investing in any product, we recommend that you consult with a professional financial advisor, taking into consideration investment objectives, financial circumstances and tax implication. While based on information believed to be reliable, we do not guarantee and make no express or implied representation as to the accuracy of this report or complete description of the securities markets or developments referred to in this report. The information, opinions, forecasts (if any), assumptions or estimates contained in this report are as of the date indicated and are subject to change at any time without prior notice. The stated price of any securities mentioned in this report is as of the date indicated and is not a representation that any transaction can be effected at this price. The risks related to investment products described in this report are not all encompassing and investors should refer to the relevant investment offer document for detailed information and applicable terms and conditions. Investment products, including treasury products, are not guaranteed by Mashreq or any of its affiliates or subsidiaries unless stated otherwise and are subject to investment risk, including loss of principal. Investment products are not government insured. Past performance is not an indicator of future performance. US persons (US Citizens; US Green Card Holders; Resident Aliens subject to US income taxes for IRS purposes) are not eligible for any of the investment products introduced by Mashreq unless stated otherwise. This report is for distribution only under such circumstances as may be permitted by applicable law. Neither Mashreq nor its officers, directors or shareholders or other persons shall be liable for any direct, indirect, incidental or other damages including loss of profits arising in any way from the information contained in this report. This report is intended solely for the use by the intended recipients and the contents shall not be reproduced, redistributed or copied in whole or in part for any purpose without Mashreq s prior express consent. Page I 10