Middle Eastern Stocks Downgraded by Smart Momentum Model Well Ahead of Market Correction

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1 Middle Eastern Stocks Downgraded by Smart Momentum Model Well Ahead of Market Correction 4 September, 2015

2 INTRODUCTION TO TRENDRATING Forecasting trends is nearly impossible. Following trends is possible and lucrative. Trendrating was developed to provide better tools to maximize investment performance and improve risk control. We bring additional intelligence and measurable value to your existing decision making processes. Superior performance and financial success come from discipline and a systematic reality check of assumptions. Bias, emotions, market noise and overconfidence may severely limit a manger's ability to perform. Over 100 asset managers globally incorporate our industry leading momentum analytics. The value of our service is not hidden behind theories and hypothesis; it is reflected every day in the P&L of our clients. THE INCREASING IMPORTANCE OF INCLUDING THE MOMENTUM FACTOR Momentum factor analytics can enhance the decision process. A momentum overlay is an effective addition to most investment strategies. Extensive academic research supports momentum as a strong and persistent factor, proven to add value to fundamental strategies. Analyzing momentum however is extremely difficult - noise and bias are everywhere. Momentum exists in many cases and goes unnoticed due to the lack of proper tools to measure it. Speed of analysis is crucial to promptly adjust index components. Trendrating was developed to quickly identify medium-to-long term trends while also filtering out the noise. OUR MOMENTUM RATINGS The complexity behind our model is boiled down to a simplistic rating scale (A, B, C, D). We believe that this approach supports an actionable decision making process and comparative analysis across markets and sectors. Trendrating s Smart Momentum Model was conceived to support long portfolios. The ratings A and B identify positive momentum phases, while C and D signal negative trends. HOW FUND MANAGERS USE TRENDRATING Quickly screen the entire market to identify new opportunities and validate existing ideas Run a systematic sanity check on all your portfolios to spot early negative momentum Create and test a tactical overlay to your existing strategy with momentum alpha Add a momentum smart beta element to your portfolios 2

3 SMART MOMENTUM FILTERS OUT NOISE TO SPOT REAL TRENDS EARLY ON MIDDLE EASTERN STOCK DOWNGRADES OUTNUMBERED UPGRADES SINCE JUNE 1 BY A RATIO OF 3-TO1 The Trendrating Smart Momentum Model has proven very effective at capturing recent trend reversals. Since June 1, the Model has issued five downgrades to every one upgrade for the universe of Middle Eastern stocks we cover. This demonstrates how momentum factor analytics are a key component in early identification of market reversals. These trends were identified well in advance of the global meltdown in late August. The information below is a summary of actual analysis delivered to our customers as it occurred in real time. It is not simulated or back tested data. Below are Middle Eastern stocks that were downgraded in the past few months and their subsequent performance: 3

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16 Middle Eastern Table: Name Country Rating Rated On Performance Since Rated 1 Alkhale Tak Gr Qatar C % 2 Bank Albilad Saudi Arabia D 08/17/ % 3 Fawaz Alhokair Saudi Arabia D 08/18/ % 4 Alinma Bank Saudi Arabia C % 5 Al Tayyar Trav Saudi Arabia C 07/30/ % 6 Arab National Bank Saudi Arabia C 07/27/ % 7 Abdullah Al Othaim Saudi Arabia C 08/17/ % 8 Arriyadh Dev.co Saudi Arabia D % 9 United Wire Fac Saudi Arabia D % 10 Utd Intl. Transp Co Saudi Arabia C 07/28/ % 11 Saudi Air Cater Saudi Arabia D % 12 Methanol Chemicals Saudi Arabia D 06/29/ % 13 Dallah Health Saudi Arabia C % 14 Dar Alarkan Reaest Saudi Arabia D % 15 Dlala Brok & Invest Qatar D 06/29/ % 16 Deyaar Development United Arab Emirates D % 17 Dubai Financial Mkt United Arab Emirates D 01/28/ % 18 Doha Bank Qatar D 01/22/ % 19 Dubai Investments United Arab Emirates C 08/17/ % 20 Eastern Cement Co Saudi Arabia D 02/16/ % 21 Etihad Etisalat Co Saudi Arabia D % 22 Gulf Intern Ser Qatar D 06/15/ % 23 Hail Cement Saudi Arabia D 05/14/ % 24 Herfy Food Saudi Arabia C 08/17/ % 25 Jarir Marketing Co Saudi Arabia C % 26 Know Ec City Saudi Arabia C % 27 Makkah Saudi Arabia C % 28 Masraf Al Rayan Qatar D 06/17/ % 29 Med Gulf Ins Reins Saudi Arabia C % 30 Nic Saudi Arabia D % 31 Alijarah Holding Qatar D % 32 Northern Region Saudi Arabia D % 33 Ooredoo Qatar D 09/23/ % 34 Qassim Cement Saudi Arabia C % 35 Qatar Fuel Co Qatar D 12/25/ % 36 Qatar Islamic Ins Qatar C 06/16/ % 37 Qatar Nat Cement Co Qatar D % 38 Qatar Oman Investm Qatar C 08/17/ % 39 Saudi Ar Fert Saudi Arabia D 06/29/ % 40 Saptco Saudi Arabia D 06/29/ % 41 Saudi Cement Saudi Arabia D 01/13/ % 42 Saudi Investment Bk Saudi Arabia D 07/29/ % 43 Sipchem Saudi Arabia C 07/28/ % 44 Southern Province Saudi Arabia D 12/31/ % 45 Saudi Real Est Saudi Arabia D 06/22/ % 46 Saudi Vit Clay Pipe Saudi Arabia C % 47 Taiba Holding Co Saudi Arabia C 06/22/ % 48 Yanbu Cement Saudi Arabia D % 49 Zamil Indust Inv Saudi Arabia C 08/13/ % 16

17 To learn more about how Trendrating Smart Momentum can help portfolio managers spot market reversals and participate in positive trends longer, please contact us at The evaluations, rankings and information provided by Trendrating (the "Services") are provided solely for the use of finance professionals (the "Users") who, by nature of their status as investment professions understand, or are expected to understand, the complexity of finance products, the functioning of the markets and the risks inherent in them. The Services are not offered for use by persons not employed or actively working as professionals in the finance and investment industry. The Services are to be used entirely at the risk of the Users. Included in the Services are forward-looking statements that are based on observations, assumptions and calculations that reflect Trendrating's expectations. Forward-looking statements are subject to numerous risks and uncertainties that could cause actual results to materially differ from those expectations. The Services are not intended to constitute a recommendation of any specific security or financial product and are to be implemented solely in conjunction with or as part of a complete investment evaluation conducted by the Users. Under no circumstances shall Trendrating, its officers, directors, employees or agents be liable for any damages, lost profits or investment losses that result in any way from use of the Services. Trendrating S.A All rights reserved. 17