IS Morning Report Tuesday, October 23, 2018

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1 # Global & Regional Benchmarks # UAE Trading Summary Indices Close 1Day 1Mnth 3Mnth YTD 1Y (AEDm) BUY SELL NET ADX 4, % 1.3% 4.1% 12.7% 10.2% ADX DFM 2, % -0.5% -6.3% -18.5% -24.1% Local 59% 65% -6% TASI 7, % -1.5% -9.5% 5.8% 11.1% Foreign 41% 35% 6% BHSEASI 1, % -2.1% -2.5% -0.7% 2.7% Institutional 75% 83% -8% EGX 13, % -4.3% -10.8% -9.1% -1.6% Retail 25% 17% 8% Dow Jones 25, % -5.3% 1.1% 2.4% 8.8% DFM S&P 500 2, % -5.9% -1.8% 3.1% 7.4% Local 61% 63% -1% Nasdaq 7, % -6.5% -4.8% 8.2% 13.4% Foreign 39% 37% 1% FTSE 100 7, % -6.0% -8.0% -8.4% -6.4% Institutional 28% 35% -7% DAX 11, % -7.3% -8.2% -10.8% -11.4% Retail 72% 65% 7% CAC40 5, % -8.0% -6.0% -4.9% -6.2% Total Nikkei225 22, % -7.3% -1.2% -2.8% 1.9% Local 61% 64% -3% HIS 25, % -8.3% -9.3% -14.4% -9.5% Foreign 39% 36% 3% # Upcoming Corporate Actions & Events Date Company Event 24-Oct NBF Board Meeting 25-Oct ETISALAT Board Meeting 27-Oct RAK Properties Board Meeting 28-Oct UNB Board Meeting 29-Oct CBI Board Meeting 30-Oct ADNIC Board Meeting 07-Nov KHCB Board Meeting 11-Nov GFH Board Meeting

2 13-Nov ITHMR Board Meeting # KEY STORIES FAB profits jump 16% for 3Q18 on investment gains to AED3.02bn FAB to launch commercial banking in Saudi in Q4 ADIB profit rises 4.5% to Dh589.5m in third quarter RAK Bank posted Q3 profit attributable to shareholders of AED238.9 million vs AED223.5 million year ago Etihad Airways, Saudia announce codeshare deal Depa wins $41m superyacht fit-out deals Tourists to receive VAT refunds from November 18 Saudi debt underperforms lower-rated sovereigns on Khashoggi fallout Saudi Arabia to resume annual bonuses to all state employees from Jan 19 Saudi's Ma'aden to develop third ammonia plant with Daelim Industrial, Saudi Daelim Saudi institutions buy stocks to arrest slide from Khashoggi death Saudi investment summit set to start despite boycott over slain journalist Bank Albilad Q3 profit rises National Bank of Bahrain seeks to buy shares in rival Oman mandates banks for 7-year dollar sukuk sale Oman budget deficit shrinks 36 pct in first seven months KFH to decide on share pricing of Ahli United Bank merger within weeks Egypt Said to Weigh Local-Currency Bond on International Market El Sewedy Electric announced that the company has received initial approval to start negotiations relating to a hydropower project in Tanzania. # Key Global Trends/ Market Clues Asian shares fell on Tuesday as earnings season nerves in the U.S. dented Wall Street, while a cocktail of negative drivers from Saudi Arabia's diplomatic isolation to concerns over Italy's budget and Brexit talks depressed sentiment. Selling in the region erased gains made in the previous two sessions' rally, which were led by China stimulus hopes, with the MSCI's broadest index of Asia-Pacific shares outside Japan dropping 1.3 percent. Oil prices fell on Tuesday after Saudi Arabia pledged to play a "responsible role" in energy markets, although sentiment remained nervous in the run-up to U.S. sanctions against Iran's crude exports that start next month. Frontmonth Brent crude oil futures were at $79.52 a barrel at 0318 GMT, down 31 cents, or 0.4 percent, from last close.

3 Saudi Arabia said Monday it had no plans to repeat its harsh 1973 oil embargo, even as relations with the West sour following the killing of Saudi critic Jamal Khashoggi. Riyadh, long the world's biggest oil producer, hiked prices sharply during the 1973 Yom Kippur War, setting off a wave of inflation that plunged developed economies into years of crisis. # UAE Stories First Abu Dhabi Bank (FAB) reported on Monday a 16 per cent jump in its net profits for the third quarter of 2018 on the back of investment income gains and declines in impairment costs. The bank s profits reached Dh3.02 billion in the quarter compared to Dh2.6 billion in the third quarter of This puts its net profit in the first nine months of 2018 at Dh9.08 billion, up 12 per cent year-on-year. First Abu Dhabi Bank (FAB), the largest bank in the United Arab Emirates by assets, will launch commercial banking activities in Saudi Arabia during the current quarter, it said on Monday. Abu Dhabi Islamic Bank (ADIB) on Monday reported a 4.5 per cent year-on-year increase in 2018 third-quarter net profit to Dh589.5 million as impairment costs fell. The earnings put total profit in the first nine months of this year at Dh1.75 billion, up 3.5 per cent from the Dh1.69 billion recorded in the same period of The rise in profits came as provisions and impairment charges fell 29 per cent to Dh171.7 million in the third quarter of 2018, despite the impaired financing-to-gross financing assets ratio ticking up to 5.5 per cent, up from the corresponding figure last year of 5.1 per cent. RAK Bank posted Q3 profit attributable to shareholders of AED238.9 million vs AED223.5 million a year ago. Q3 net interest income and income from Islamic financing clocked in at AED708.7 million vs AED699.3 million year ago. Etihad Airways announced on Monday a new codeshare partnership with Saudi Arabian Airlines (Saudia) as well as plans for stronger commercial cooperation between the two carriers. The deal will see Etihad and Saudia cooperate in fields that include cargo, engineering and maintenance, and their frequent-flyer programme benefits, with Etihad Airways Engineering to provide certain maintenance services for Saudia aircraft at the former s facility in Abu Dhabi. Depa Limited has announced two project awards with a total value of EUR36 million ($41.4 million). Vedder, Depa s European-based key business unit, has secured the entire interior fit-out packages for two new-build superyacht projects. Vedder, located in Germany, specialises in the provision of interior solutions to the superyacht, private jet and high-net-worth residence fit-out markets. Tourists will be able to claim back Value Added Tax (VAT) on any purchases they make in the UAE from November 18, it was announced yesterday. # GCC/ MENA Saudi Arabia s international bonds are underperforming lower-rated emerging market sovereigns, in a sign of how deeply the killing of journalist Jamal Khashoggi has damaged sentiment toward the kingdom. Rated A1 by Moody s, A- by S&P and A+ by Fitch, Saudi Arabia has sold $52 billion in U.S. dollar-denominated bonds since its first international issue in 2016, becoming one of the biggest debt issuers in emerging markets. But since early October, when Khashoggi died inside the Saudi consulate in Istanbul, the kingdom's bonds have slowly been moving closer to those of triple-b rated governments.longer-dated Saudi debt has been particularly hard hit, perhaps because the short end of the curve enjoys more interest among institutional investors in other Gulf Arab countries that are diplomatic allies of Saudi Arabia.The yield on Saudi Arabia s $6.5 billion of bonds due in 2046 has risen by around 40 basis points to over 5.20 percent since start of October. Saudi debt has underperformed other triple-b rated emerging- market sovereigns such as Russia and Morocco by around 20 bps in October. Saudi Arabia to resume annual bonuses to all state employees from Jan 19

4 Saudi Arabian Mining announces project for construction of third ammonia plant (value SAR 3.35 billion) sign off to Daelim Industrial Limited and Saudi Daelim Limited. Financial impact will begin by the second or third quarter after the expected completion date (38 months) in 2022 and the plant will be constructed in Ras Alkhair Industrial City. New plants design capacity is approximately 1.1mt of ammonia per annum. Saudi Arabia's stock index recovered most of its earlier losses on Monday, with government-linked funds continuing to bolster the market as concerns about the killing of Saudi journalist Jamal Khashoggi weighed. The main index TASI recovered to trade down only 0.2 percent after falling as much as 3.3 percent, similar to the previous session where it closed in positive territory despite an early sell-off. Saudi Arabia brushed off a Western boycott over the killing of journalist Jamal Khashoggi as it prepared to launch an investment conference on Tuesday that has been overshadowed by the withdrawal of dozens of top business and government leaders. Hundreds of bankers and company executives are still expected to join officials at a palatial Riyadh hotel for the Future Investment Initiative, an annual event designed to help attract billions of dollars of foreign capital as part of reforms to end Saudi dependence on oil exports. Bank Albilad posted Q3 net profit 287 million riyals vs million riyals year ago. Q3 total revenue for special commissions/investments clocked in at million riyals vs million riyals year ago. Q3 net income has increased due to increase in total operating income by 15.4 pct while Q3 total operating expenses have increased by 14.8 pct due in part to increase in impairment charge for credit, other financial assets. National Bank of Bahrain (NBB) is weighing an acquisition of shares in Bahrain Islamic Bank (BISB), the company said in a disclosure on Monday. The lender is considering making a potential voluntary offer for issued shares in BISB, the filing said, without specifying whether NBB would be buying a stake or a complete acquisition of BISB. The government of Oman has hired banks to arrange a global investor call ahead of a planned sale of dollardenominated sukuk, or Islamic bonds, a document issued by one of the banks leading the deal showed on Monday. Gulf International Bank, HSBC, JPMorgan, KFH Capital and Standard Chartered Bank have been mandated as joint lead managers and bookrunners for the potential sale. Oman's state budget deficit for the first seven months of 2018 plunged 36.3 percent from a year earlier to 1.65 billion rials ($4.27 billion) as oil revenues rose sharply, data from the Finance Ministry showed on Monday. KFH to decide on share pricing of Ahli United Bank merger within weeks. Egypt is considering issuing local currency-denominated bonds on the international market in an effort to boost overseas inflows and reduce the cost of borrowing, four people familiar with the matter said. While investors would purchase the bonds in dollars, the principal and interest would be payable in Egyptian pounds, which means the buyer bears the risk of any fluctuation in the exchange rate, said the people, declining to be named as the plans are still under discussion. A pound-denominated international bond is one of a number of options the government is considering as it seeks to diversify its funding sources and reduce the mounting cost of debt servicing. The Finance Ministry didn t immediately respond to requests for comment. El Sewedy Electric announced that the company has received initial approval to start negotiations relating to a hydropower project in Tanzania. (Source: ADX, DFM, Bloomberg, Reuters, Gulf News, The National, Arabian Business) Disclaimer This report was prepared by Integrated Securities ( IS ) in and for the United Arab Emirates ( U.A.E. ). IS is a securities brokerage company regulated by the Emirates Securities and Commodities Authority (and neither an investment nor a financial advisory firm). The information contained in this report is given in summary and does not purport to be complete. All securities and financial product or instrument transactions involve risks, which include (among others) the risk of adverse or unanticipated market, financial or political developments and, in international transactions, currency risk. Content of this

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