Saudi Arabian Economy

Transcription

1 Saudi Arabian Economy Economic Research Research Department ARC Research Team Tel , Following the rise in crude oil prices, IMF has marginally raised Saudi Arabia s 2018 economic growth forecast to 1.7% (previous: 1.6%). This is expected to further accelerate to 1.9% in 2019 (previous estimate: 2.2%) on account of a possible increase in oil production post the expiry of output cut agreement. SAMA data supported IMF s contention of pick-up in economic activity as total credit growth stood at 0.5% m-o-m in March 2018, driven by private sector credit (+0.6% m-o-m, highest in 22 months). Consumer spending was also strong, as indicated by the 19.8% y-o-y jump in POS transactions (second highest growth in three years), led by Restaurants and Hotels, Food and Beverage and Clothing and Footwear segments. On the other hand, unemployment rate among Saudi nationals remained steady in Q4, whereas the overall unemployment rate rose to 6% (from 5.8% in previous quarter), indicating higher unemployment among non-saudi nationals. Meanwhile, the Saudi government continues on its path to reduce the Kingdom s dependence on oil, and recently released the details of the privatization program, a major part of its Vision 2030 plan. Under the plan, the government targets to raise SAR35-40bn from asset sales, and achieve additional net savings (capex & opex) of SAR25-33bn from privatization /PPP, while creating 10-12k jobs by Moody s recently affirmed the Kingdom s sovereign rating at A1 on expectations of continued fiscal consolidation coupled with the government s structural reforms. Meanwhile, SAMA reserves rose on a monthly basis in March after falling for two straight months, supported by rising oil revenue. Separately, Q4 GDP data showed that the Saudi economy contracted in the last quarter of (- 1.2% y-o-y), primarily owning to the oil sector (-4.3% y-o-y). Kingdom s privatization program to raise around SAR35-40bn by 2020 through asset sales. Under the scheme, the government would engage in privatization of its football clubs, four flour mills and a water desalination production facility. The plan also calls for corporatization of ports, privatizing of some transportation sector services, and making King Faisal Specialist Hospital & Research Centre a non-profit organization. The plan (Privatization/PPP) would also lead to net savings (capex & opex) of SAR 25-33bn for the Saudi government by 2020, while creating 10-12k jobs by Kingdom s Q4 GDP figures showed that the economy contracted 1.2% y-o-y (-0.4% y-o-y in Q3 ), dragged down by the 4.3% decline in oil sector due to the output cut deal. However, the non-oil sector grew 1.3% y-oy, compared to 2.1% y-o-y growth in Q3, backed by government spending (Figure 2 & 3). Moody s affirmed Saudi Arabia s sovereign credit rating to A1 on expectations that the government s structural reforms would reduce the Kingdom s reliance on oil and the continued fiscal consolidation would stabilize the government s debt burden below 30% of the GDP. Please see penultimate page for additional important disclosures. Al Rajhi Capital (Al Rajhi) is a foreign broker-dealer unregistered in the USA. Al Rajhi research is prepared by research analysts who are not registered in the USA. Al Rajhi research is distributed in the USA pursuant to Rule 15a-6 of the Securities Exchange Act of 1934 solely by Rosenblatt Securities, an SEC registered and FINRA-member broker-dealer.

2 SAMA total reserves rose sequentially after falling for two straight months (Figure 12 & 13) in March Government reserves with SAMA stood at SAR 605.4bn (including Government current account) as of March 2018, recording a monthly fall of 0.5%. Meanwhile, the deposits declined for the second consecutive month in March, down 0.6% m-o-m (-0.5% y-o-y), whereas credit to the private sector rose 0.6% m-o-m (-0.7% y-o-y) in March (Figure 14, 15, 16 & 17). Q4 labour data indicated that the total unemployment rate rose to 6.0% from 5.8% in Q3, while the Saudi unemployment rate remained steady at 12.8% for the same period (Figure 5 & 6). Real Estate Price Index fell at a slower pace of 1.5% y-o-y in Q1 2018, as against a fall of 3.3% y-o-y in Q4, as residential and commercial property prices dropped at a slower pace (Figure 7). Banking sector profits surged 22.4% y-o-y to stand at SAR 4,143mn in March 2018, while on a monthly basis, profits rose 8.9% (Figure 21). The cumulative banking sector profits for Q stood at SAR 12,113mn, up 7.6% y-o-y. Money Supply (M3) rose 0.2% y-o-y in March 2018 to SAR 1,782bn, versus the yearly rise of 2.0% in February, supported by the rise in M1 (+2.2% y-o-y). Meanwhile, as per the weekly money supply data by SAMA, M3 may remain broadly stable in April 2018 (Figure 19). Consumer spending continued to march north as indicated by the Point-of-sale (POS) transaction +19.8% y-o-y in March 2018, versus the rise of 8.7% y-o-y in February, led by rise in Restaurants and Hotels (+41.7% y-o-y), Food and Beverage (+25.9%) and Clothing and Footwear (+14.9% y-o-y) segments. ATM transactions rose 5.3% y-o-y in March 2018 compared to the rise of 2.7% y-o-y in February (Figure 9, 10 & 11). Personal Transfers (Remittances) by Saudi nationals advanced 40.6% y-o-y in March 2018, while remittances by non-saudi nationals was almost flat (+0.4% y-o-y) in the same month (Figure 8). Crude oil prices (Brent July futures contract) gained 8.5% m-o-m in April 2018, due to geopolitical concerns in Syria and Iran coupled with easing trade war concerns between the US and China. Further, the drop in the US crude oil stockpiles also supported crude oil prices. Meanwhile, Saudi Arabia s crude oil production edged down on a monthly basis in March 2018 (Figure 24 & 25). Kingdom s non-oil exports advanced for the fifth consecutive month, up by 35.8% y-o-y in February 2018 (+18.0% y-o-y in January 2018), whereas the non-oil imports fell 1.1% y-o-y in February 2018 (-13.2% y-o-y in January 2018) (Figure 26, 27, 28, 29 & 30). Cost of living index (base year 2013) grew by 2.8% y-o-y in March 2018, owing to slower rise in the Housing, Water, Electricity, Gas and Food & Beverage sectors. On a monthly basis, the index slipped 0.2% in March 2018 as against the rise of 0.1% m-o-m in the previous month (Figure 22 & 23). Saudi Arabia raised SAR 5bn in April through domestic sukuk issuance under the SARdenominated sukuk program. The government sold SAR3.8bn of 5 year bonds, SAR 750mn of 7 year bonds and SAR 450mn of 10 year bonds. Further, the Kingdom also raised US$ 11bn via international bond sales. The government issued US$ 4.5bn of 7 year bonds, US$ 3bn of 12 year bonds and US$ 3.5bn of 31 year bonds. Crude price outlook: The US Energy Information Administration (EIA) in its April 2018 report estimated Brent crude oil prices to average US$63/barrel for 2018 and Disclosures Please refer to the important disclosures at the back of this report. 2

3 Figure 1 Key macro indicators Variable Apr-18 Mar-18 Feb-18 Inflation Rate (2007=100) % - 2.8% 2.9% -0.9% 2.0% Apr-18 Mar-18 Feb-18 Average Oil Price (Arab Light) (US$/Barrel) Apr-18 Mar-18 Feb Money Supply (M3) % - 0.2% 2.0% 0.2% 0.8% Total Banking Sector Claims Interbank Interest Rate (3 Month) % Repo Rate % Reverse Repo Rate % General Share Price Index (1985=1000) Q4 * Q3 * * GDP Rate at Constant Prices (2010=100) % % -0.4% -0.7% 1.7% Q4 * Q3 * 2015 Current Account to GDP Ratio (current prices) % - 4.4% 4.7% -3.7% -8.7% Total Imports (fob) to GDP Ratio (current prices)% % 16.4% 19.8% 24.3% Non-oil Exports to GDP Ratio (current prices) % - 8.4% 7.3% 7.4% 7.7% Source: SAMA, Bloomberg * Provisional. Arab light and Interbank interest rate data is as on 30 April Gross Domestic Product Kingdom s GDP fell by 1.2% y-o-y in Q4 According to the GDP data released by GASTAT, the Kingdom s Q4 GDP declined 1.2% y-o-y (-0.4% y-o-y in Q3 ), as the oil sector (-4.3% y-o-y Vs -4.1% y-o-y in Q3 ) continued to be weighed down by production cut deal. Meanwhile, the non-oil sector slowed down, but continued to grow (+1.3% y-o-y in Q4, vs. +2.1% in Q3 ) supported by government spending. Government final consumption expenditure grew 6.5% y-o-y to ~SAR178bn, which could be attributable to the low base of Q4, when the government cut public sector employee salaries and allowances. As for, nominal GDP grew 6% led by oil sector while real GDP declined 0.7%. Figure 2 Quarterly GDP Trend (y-o-y growth) Real GDP by type of economic activity Share in GDP Q4 Q3 Q2 Q1 Agriculture, Forestry & Fishing 2.0% 0.4% 0.6% 0.8% Mining & Quarrying 38.5% -4.8% -4.7% -2.4% -2.3% Manufacturing 11.8% 0.8% 2.7% 1.6% 2.3% Electricity, Gas and Water 0.9% 0.5% 2.6% 1.1% -1.6% Construction 4.5% -3.5% -1.6% -1.6% -3.2% Wholesale & Retail Trade, Restaurants & hotels 9.1% 1.4% 2.6% -0.1% 0.3% Transport, Storage & Communication 6.0% 1.7% 3.5% 0.8% 1.0% Finance, Insurance, Real Estate & Business Services 9.3% 0.8% 2.1% 1.9% 1.1% Community, Social & Personal Services 1.9% 1.5% 0.6% 0.9% 0.4% Producers of Government Services 15.8% 3.2% 2.9% 0.9% -0.4% Gross Domestic Product % -0.4% -1.0% -0.5% Disclosures Please refer to the important disclosures at the back of this report. 3

4 Figure 3 Real GDP trend at constant prices (y-o-y) 15.0% 8.0% 6.0% 1 5.0% 3.3% 4.0% 2.9% 2.6% 0.3% 2.0% 5.0% 8.0% 4.4% 3.0% 6.0% 4.1% 4.0% -2.1% 0.2% 0.6% 8.1% 6.2% 6.1% 6.0% 0.6% 0.3% 4.1% 4.4% -0.6% 0.7% 0.6% 0.6% 2.1% 1.3% -2.3% -1.8% -4.1% -4.3% -2.0% -4.0% -6.0% -5.0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q % Oil Sector Non-Oil Sector GDP (RHS) Figure 4 SAIBOR Vs LIBOR LIBOR (3M) SAIBOR (3M) Source: Bloomberg, Al Rajhi Capital Saudi unemployment remained unchanged at 12.8% in Q4 Labor market update Saudi unemployment rate remained steady at 12.8% in Q4, while overall unemployment in the Kingdom rose to 6.0% in Q4 compared to 5.8% in Q3, indicating rise in unemployment among non-saudi nationals. Around 100.1k new Saudi jobs were added during the quarter, while at the same time non-saudi jobs declined by ~277k. Around 212.2k Saudi nationals joined the labor force during the quarter, whereas non-saudi labor force grew ~131.1k. Meanwhile, average monthly wages of Saudi nationals dropped 0.7% q-o-q to SAR 9,939, while overall average monthly wages slipped 0.4% q-o-q to SAR 6,093. Disclosures Please refer to the important disclosures at the back of this report. 4

5 Figure 5 Unemployment Figure 6 Average monthly wages in the Kingdom (SAR) 13.0% 12.5% 12.0% 11.5% 11.0% 5.7% 11.6% 11.5% 11.7% 5.6% 5.6% 12.1% 5.7% 12.3% 5.6% 12.7% 12.8% 12.8% 12.8% 6.0% 6.0% 5.8% 5.8% 6.1% 6.0% 5.9% 5.8% 5.7% 5.6% 5.5% 5.4% 6,500 6,400 6,300 6,200 6,100 6,000 5,900 5,800 5,700 9,447 5,937 10,462 10,271 10,031 10,045 10,012 9,884 9,911 9,939 9,707 6,411 6,413 6,384 6,303 6,195 6,099 6,119 6,093 5,959 10,600 10,400 10,200 10,000 9,800 9,600 9,400 9,200 9, % Q2 Q3 Q4 Q1 Q2 Q3 Q4 5.3% 5,600 H H H H H1 Q4 Q1 Q2 Q3 Q4 8,800 Saudi unemployment rate Total unemployement rate (RHS) Total Saudis (RHS) Real Estate Price Index fell at a slower rate in Q Real Estate Price Index According to the data released by GASTAT, real estate prices slipped by 1.5% y-o-y in Q versus a decline of 3.3% in the previous quarter, as residential and commercial property prices declined at a slower pace. Figure 7 Real Estate Price Index General Index Residential Commercial Agricultural Q4 Q Remittances continued to rise in March 2018 Remittance Personal Transfers (Remittances) increased in March Remittances from Saudi nationals gained 40.6% y-o-y to ~SAR 6.3bn in March 2018, while remittances from non- Saudi nationals was almost flat (+0.4% y-o-y) at SAR 12.8bn. Disclosures Please refer to the important disclosures at the back of this report. 5

6 Figure 8 Remittances SAR mn Saudi Non-Saudi Saudi y-o-y change (RHS) Non Saudi y-o-y change (RHS) Consumer spending continued to rise in March 2018 Consumer spending indicators POS transactions advanced by 19.8% y-o-y in March 2018 versus the annual rise of 8.7% in the previous month, while the ATM cash withdrawals grew by 5.3% y-o-y in March 2018 compared to the rise of 2.7% in February Spending growth was driven by rise in Restaurants and Hotels (+41.7% y-o-y), Food and Beverage (+25.9% y-o-y) and Clothing and Footwear (+14.9% y-o-y) segments. Figure 9 Point-of-sale transactions (POS) trend Figure 10 ATM cash withdrawals trend SAR bn % SAR bn % % 20% % 30% 20% 10% % % % % % -20% - -20% - -30% POS YoY ATM Cash withdrawals YoY Disclosures Please refer to the important disclosures at the back of this report. 6

7 Figure 11 Points-of-sale transactions trend by sectors 50.00% YoY change 40.00% 30.00% 20.00% 10.00% 0.00% % % % Transportation Rest. and Hotels Food & Beverages Cloth. and Footwear SAMA reserves rose sequentially in March 2018 SAMA Foreign Exchange Reserves SAMA Foreign Exchange reserves after dropping for two months in a row, rose by 1.3% m-om in March 2018 to stand at SAR 1,850bn (US$ 493.3bn). On a yearly basis, reserves dropped in March 2018 at the slowest pace in almost three years. Meanwhile, investment in foreign securities gained by 0.9% m-o-m in March (-1.9% m-o-m in February), while foreign currency and deposits abroad advanced 2.0% m-o-m in March (-0.5% m-o-m in February). Figure 12 Reserves assets Figure 13 Major components of foreign assets SAR bn 3,000 2,500 2,000 1,500 1, % 1 5.0% -5.0% % -2 SAR bn 2,500 2,000 1,500 1, Reserves Assets YoY (RHS) Foreign Currency & Deposits Abroad Investment in Foreign Assets Private sector credit rose on a monthly basis in March 2018 Credit and deposit growth Banking sector credit to the private sector growth accelerated to 0.6% m-o-m in March 2018 (-0.7% y-o-y), compared to 0.1% m-o-m growth in the previous month (-0.9% y-o-y). Meanwhile, for Q the private sector credit slipped 0.9% y-o-y (+0.5% q-o-q), dragged down by the fall in credit to the Manufacturing & Processing and Building & Construction sectors. Disclosures Please refer to the important disclosures at the back of this report. 7

8 Claims on the public sector gained by 40.8% y-o-y (+0.3% m-o-m) in March 2018, compared to the rise of 42.9% y-o-y (+2.2% m-o-m) in the previous month, primarily due to the increase in bank holding of government and quasi govt. bonds. However, deposits dropped 0.5% y-o-y in March (-0.6% m-o-m). Business and Individual deposits, which accounted for ~73% of the total deposit base, edged up 0.1% y-o-y (+1.7% m-o-m), whereas Government Entities deposits fell 7.1% y-o-y (-4.9% m-o-m). Figure 14 Credit and deposit growth Figure 15 Loans to Deposits YoY % 1 5.0% -5.0% % 85.0% 84.0% 83.0% 82.0% 81.0% % 78.0% 77.0% Deposits Credit Loan to Deposit Ratio Figure 16 Y-o-Y growth/decline in credit by sector Figure 17 Banking sector exposure by economic activity YoY change 30% 100% 25% 90% 20% 15% 10% 5% 0% -5% 80% 70% 60% 50% 40% 59% 59% 58% 59% 59% 59% 58% 59% 59% -10% 30% 21% 21% 21% 21% 22% 22% 23% 23% 23% -15% -20% Q Q Q Q Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q % 10% 0% 8% 8% 8% 7% 7% 7% 7% 6% 7% 12% 13% 13% 13% 13% 12% 12% 12% 11% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q Manufacturing & Processing Building and Construction Commerce Manufacturing & Processing Building and Construction Commerce Others M3 witnessed a rise in March 2018 Money supply Broader money supply (M3) increased by 0.2% y-o-y in March 2018, to stand at SAR 1,782bn, as against the rise of 2.0% in February The rise in M3 is largely due to the increase in M1. On a monthly basis, the M3 dropped for the second consecutive month. As per the weekly money supply data by SAMA, M3 may remain broadly stable in April. Disclosures Please refer to the important disclosures at the back of this report. 8

9 Figure 18 Money supply growth (y-o-y) Figure 19 Deposits break-up 25.0% % 1 5.0% -5.0% % 1,200 1, % 25% 20% 15% 10% 5% 0% -5% -10% -15% M1 M2 M3 Time and Saving Deposits (LHS) Time and Saving Deposits (y-o-y) Demand Deposits (LHS) Demand Deposits (y-o-y) Banking sector profits rose in March Banking Sector Banking sector profits advanced 22.4% y-o-y in March 2018 (+8.9% m-o-m), to stand at SAR 4,143mn. For Q1 2018, profits for the year stood at SAR 12,113mn, up 7.6% y-o-y (+17.6% q- o-q). Figure 20 Non-performing loans (%) Figure 21 Net Profit for Banks SAR mn 5,000 4,500 4,000 3,500 3,000 2,500 2, ,500 1, Nonperforming loans to total gross loans. Q data not released yet. Cost of living index rose at a slower pace in March Inflation dynamics Cost of living index (base year 2013) grew at a slower pace (+2.8% y-o-y in March) compared to +2.9% y-o-y in February, due to fading effect of VAT. The Housing, Water, Electricity, Gas sector (accounting ~25.3% of the index) rose by +1.0% y-o-y (+1.3% y-o-y in February), while the Food & Beverage sector (constituting ~18.8% of the index) rose at a slower rate of +6.0% y-o-y (+6.5% y-o-y in February). On a monthly basis, the cost of living index slipped 0.2% in March 2018 versus the rise of 0.1% m-o-m in February Disclosures Please refer to the important disclosures at the back of this report. 9

10 Figure 22 Inflation trend (y-o-y) Figure 23 Inflation drivers (y-o-y) 5.0% 12.0% 4.0% 3.0% 2.0% 3.0% 2.9% 2.8% 1 8.0% 6.0% 4.0% 1.0% 2.0% -1.0% -0.7% -0.7% -0.8% -0.5% -0.8% -0.8% -0.8% -1.2% -1.1% -2.0% -1.7% -3.0% -2.0% -4.0% -6.0% General Index Food And Beverages Transport Furnishings, Household Housing, Water, Electricity, Gas Crude oil prices rose in April 2018 Crude oil dynamics Saudi crude oil output edged down 0.1% sequentially, to 9.9mbpd in March 2018, compared to the drop of 0.8% m-o-m in February On a yearly basis, the crude oil output dropped 0.7% in March 2018 versus the fall of 0.6% in February Crude oil prices (Brent July futures contract) gained 8.5% m-o-m in April 2018, due to geopolitical concerns in Syria and Iran along with easing trade war concerns between the US and China. Further, the drop in the US crude oil stockpiles also aided crude oil prices. Figure 24 Saudi crude oil production trend (mbpd) Figure 25 Crude oil prices trend (US$/bbl) % 1 8.0% 6.0% 4.0% 2.0% -2.0% -4.0% -6.0% -8.0% Source: Bloomberg, Al Rajhi Capital Saudi Crude oil production YoY growth Source: Bloomberg, Al Rajhi Capital Brent WTI Arab Light Non-oil exports increased in February 2018 Non-oil foreign trade Kingdom s non-oil exports continued to rise in February 2018, up by 35.8% y-o-y, as against +18.0% y-o-y in January The rise can be attributed to the increase in plastics & rubbers (+54.7% y-o-y), accounting 34.8% of the total exports, followed by chemical products (+32.0% y-o-y), constituting 31.0% of total exports. However, non-oil imports dropped by 1.1% y-o-y in February 2018, versus the fall of 13.2% y-o-y in January The fall was largely owing to the drop in imports of machinery & electrical (-18.6% y-o-y) and chemical products (-10.4% y-o-y), which together constituted for 29.9% of the total imports. Meanwhile, China was the top export and import destination in February Disclosures Please refer to the important disclosures at the back of this report. 10

11 Figure 26 Non-Oil Exports Commodities (SAR mn) Dec-17 Jan-18 Feb-18 % y-o-y % m-o-m Plastics & Rubbers 6,121 5,876 6, % 6.5% Chemical Products 4,578 4,954 5, % 12.5% Ordinary Metals 1,793 1,772 1, % -6.0% Transport Equipments 1,954 1,443 1, % -5.5% Others 4,175 3,166 3, % -0.7% Total 18,621 17,211 18, % 4.6% Figure 27 Non-Oil Imports Commodities (SAR mn) Dec-17 Jan-18 Feb-18 % y-o-y % m-o-m Machinery & Electricals 10,219 9,290 7, % -14.8% Transport Equipments 6,076 6,677 9, % 42.2% Ordinary Metals 3,491 3,595 3, % -2.0% Chemical Products 4,247 4,132 3, % -11.4% Others 15,316 15,391 14, % -7.9% Total 39,349 39,085 38, % -0.8% Figure 28 Non-oil export trend (y-o-y) Figure 29 Non-oil import trend (y-o-y) YoY % % 1.9% -9.8% % % % -2.1% 18.2% 17.2% 18.0% 13.1% 35.8% YoY % % -3.3% -11.3% -15.5% -20.1% -29.0% -9.8% 2.3% -2.6% -1.1% -13.2% -8.2% Non-oil Export Non-oil Import Disclosures Please refer to the important disclosures at the back of this report. 11

12 Figure 30 Impact of currencies on Weighted-average Saudi imports (m-o-m) * FX movement (USD/Unit) August September October November December January February EUR 0.6% -0.8% -1.4% 2.2% 0.8% 3.4% -1.8% YUAN 1.9% -0.6% 0.1% 0.4% 1.4% 3.6% -0.7% YEN 0.3% -2.3% -1.0% 1.0% -0.1% 3.2% 2.3% FX impact on weighted average imports Germany -0.1% 0.1% 0.2% -0.1% China 0.3% -0.1% 0.1% 0.2% 0.5% -0.1% Japan -0.1% 0.1% 0.1% Source: Bloomberg, GASTAT, Al Rajhi Capital * Out of the 5 top-ranked countries of import, currency of UAE is pegged and so would its variance with the USD and therefore it has been ignored. USD itself is the currency of comparison and so US has also not been taken. Currency movement of Germany, China and Japan has been taken up for analysis. For calculation of weights of the countries of import, data from February has been chosen and assumed constant for preceding period, as consistent data sets is not available for all the countries chosen for analysis. For February 2018, the weights are China (15.0%), Germany (5.2%) and Japan (4.5%). Saudi International bond yields grew in April 2018 Saudi international bond yields Saudi international bond yields with 5 year maturity gained by 17.6bps m-o-m to 3.563% in April 2018, while bond yields with 10 and 30 year maturities rose by 21.8bps and 19.4bps to 4.287% and 5.097%, respectively. Figure 31 International Bond Yields 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 30 Yr 10 Yr 5 Yr Source: Bloomberg, Al Rajhi Capital Most major currencies fell on monthly basis against the USD in April Exchange Rates On the forex front, except the Canadian Dollar most major currencies (Chinese Yuan, British Pound, Australian Dollar, Euro and the Japanese Yen) declined sequentially as against the US Dollar in April Disclosures Please refer to the important disclosures at the back of this report. 12

13 Figure 32 Monthly Change (%) against the US Dollar 1.0% 0.5% -0.5% -1.0% -1.5% -2.0% -2.5% -3.0% Canada China UK Australia Europe Japan Monthly Change (%) against USD Source: Bloomberg, Al Rajhi Capital Disclosures Please refer to the important disclosures at the back of this report. 13

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15 Disclaimer and additional disclosures for Economic Research Disclaimer This research document has been prepared by Al Rajhi Capital Company ( Al Rajhi Capital ) of Riyadh, Saudi Arabia. It has been prepared for the general use of Al Rajhi Capital s clients and may not be redistributed, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of Al Rajhi Capital. Receipt and review of this research document constitute your agreement not to redistribute, retransmit, or disclose to others the contents, opinions, conclusion, or information contained in this document prior to public disclosure of such information by Al Rajhi Capital. The information contained was obtained from various public sources believed to be reliable but we do not guarantee its accuracy. Al Rajhi Capital makes no representations or warranties (express or implied) regarding the data and information provided and Al Rajhi Capital does not represent that the information content of this document is complete, or free from any error, not misleading, or fit for any particular purpose. This research document provides general information only. Neither the information nor any opinion expressed constitutes an offer or an invitation to make an offer, to buy or sell any securities or other investment products related to such securities or investments. It is not intended to provide personal investment advice and it does not take into account the specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek financial, legal or tax advice regarding the appropriateness of investing in any securities, other investment or investment strategies discussed or recommended in this document and should understand that statements regarding future prospects may not be realized. Investors should note that income from such securities or other investments, if any, may fluctuate and that the price or value of such securities and investments may rise or fall. Fluctuations in exchange rates could have adverse effects on the value of or price of, or income derived from, certain investments. Accordingly, investors may receive back less than originally invested. Al Rajhi Capital or its officers or one or more of its affiliates (including research analysts) may have a financial interest in securities of the issuer(s) or related investments, including long or short positions in securities, warrants, futures, options, derivatives, or other financial instruments. Al Rajhi Capital or its affiliates may from time to time perform investment banking or other services for, solicit investment banking or other business from, any company mentioned in this research document. Al Rajhi Capital, together with its affiliates and employees, shall not be liable for any direct, indirect or consequential loss or damages that may arise, directly or indirectly, from any use of the information contained in this research document. This research document and any recommendations contained are subject to change without prior notice. Al Rajhi Capital assumes no responsibility to update the information in this research document. Neither the whole nor any part of this research document may be altered, duplicated, transmitted or distributed in any form or by any means. This research document is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or which would subject Al Rajhi Capital or any of its affiliates to any registration or licensing requirement within such jurisdiction. Contact us Mazen AlSudairi Head of Research Tel : alsudairim@alrajhi-capital.com Al Rajhi Capital Research Department Head Office, King Fahad Road P.O. Box 5561, Riyadh Kingdom of Saudi Arabia research@alrajhi-capital.com Al Rajhi Capital is licensed by the Saudi Arabian Capital Market Authority, License No. 37/ Disclosures Please refer to the important disclosures at the back of this report. 15