GCC Markets. GCC Markets Performance June Global Research GCC Market Performance Markets - GCC July 2016

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1 Global Research GCC Market Performance Markets - GCC July 2016 Performance June 2016 GCC markets close mixed in June Brexit impact neutral to negative for GCC markets Market capitalization rises 2% GCC markets close mixed in June GCC markets ended on a mixed note in June on weak global cues and Brexit, which hurt market sentiment worldwide amid a flattish oil price scenario. The KSE (-0.7%) was the top loser for the month, followed by the MSM30 (-0.6%) and the DFM (-0.1%). The ADX was the top gainer for the month (5.8%), followed by the QE (3.6%), the TASI (0.8%), and the BSE (0.6%). Combined market capitalization rises 2% The combined market capitalization of GCC bourses rose 2% to USD836bn in June from USD819bn in May. The Saudi bourse contributed the most (USD401bn or 47.9%) to the overall market capitalization, followed by the Qatari index (USD122bn or 14.6%), and the Abu Dhabi and Dubai markets (USD199bn or 23.8%). The Kuwaiti, Omani, and Bahraini exchanges contributed USD114bn (13.7%). Trading declines Trading activity slowed down in June, with the volume traded declining 17% to 12.6bn shares and value traded falling 25.1% to USD26.3bn. Market Performance in June May Jun Jun Jun Jun Jun Jun Jun-16 Saudi Qatar Kuwait (Price) KWSE (Weighted) Abu Dhabi Dubai Oman Bahrain MSCI EM Index MSCI World Index Please see penultimate page for additional important disclosures. Indices () (YTD) KSE Price Index -0.7% -4.5% Tadawul All Share Index 0.8% -6.0% DFM Index -0.1% 5.1% ADX Index 5.8% 4.4% Bahrain All Share 0.6% -8.0% QE Index 3.6% -5.2% MSM30 Index -0.6% 6.9%

2 GCC Aggregate Market Capitalization Country Market Cap June 2016 Market Cap May 2016 () % of total June 2016 Kuwait % 9.6% Saudi Arabia % 47.9% Abu Dhabi % 14.3% Dubai % 9.5% Qatar % 14.6% Oman % 2.0% Bahrain % 2.1% Total GCC % 100.0% GCC Aggregate Trading Activity Country June 2016 May 2016 traded Volumes (mn) As a % of total value traded traded Volumes (mn) As a % of total value traded Bahrain % % Kuwait , % , % Oman % % Qatar % % Saudi Arabia , % , % UAE , % , % GCC Total , % , % Brexit impact neutral to negative for GCC markets The much-awaited referendum on June 23, 2016, resulted in British citizens changing the course of the world s fifth largest economy by voting to leave the European Union. This shocked investors worldwide and its impact was recorded across global markets and currencies. We expect Brexit and consequent events to push the US Fed to adopt a much more dovish stance, which would result in a delay in rate hikes. Given the currency peg of GCC countries, such an event would be positive for these countries; as lower oil prices have resulted in slower growth for GCC countries, a lower interest rate would be conducive in such a scenario. However, from the point of view of local banks, a delay/slower rise in interest rates would be considered a negative as this was expected to be the main catalyst for their earnings growth trajectory. Given GCC exports to the UK and the EU comprise mainly oil and energy related products, any slowdown in these economies due to Brexit may put pressure on oil prices. The UK remains among the top five buyers in Dubai s property market. While asset managers and investors in the GCC region may witness their existing investments in the UK get devalued and/or yields eroded due to a weaker pound, softer prices and a cheaper currency offer an opportunity for investors. Additionally, the weaker currency is expected to adversely impact tourism as well given that British and European national are one of the top tourists in Dubai. 2

3 1 Yr Forward PE Global Research GCC GCC Market Valuation 1-year forward PE USA Japan India 14.0 Abu Dhabi 12.0 Hong Kong China KSA Qatar Oman Russia Brazil Dubai Kuwait Egypt Bahrain % -10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 1 yr forward EPS growth Global markets close mixed Global markets ended mixed in June. The British citizens decision to leave the European Union in the muchawaited referendum changed the course of the world s fifth largest economy toward an uncertain path. This sent shockwaves across the globe, with major markets reeling under pressure. US indices closed largely flat for the month, recovering significantly from their monthly lows formed after Brexit. The markets were flat or positive during the major part of the month, mainly due to the Fed Chair s dovish statement easing concerns of an early interest rate hike as well as flattish oil prices. In the latter half of the month, however, British citizens decision to leave the EU pushed the markets to new monthly lows. However, this was short-lived as bargain hunting and short covering eventually took the indices higher to close largely flat for the month. European markets ended mixed in June. The UK s FTSE ended the month in the green despite the significant increase in volatility, mainly due to British citizens historic decision to leave the EU in the referendum on June 23. However, Germany s DAX and France s CAC ended in the red, impacted by the Brexit aftermath. Asian markets ended on a mixed note. The market remained cautious due to significant volatility caused by the UK s referendum, global growth concerns fuelled by mixed Chinese economic data, expectations of a delay in rate hikes by the Fed, and a stronger dollar. 3

4 1-Jun 7-Jun 13-Jun 19-Jun 23-Jun 29-Jun in mn Global Research GCC Bahrain BSE rises 0.6% in June After a flat performance in May, BSE gained 0.6% in June. The market started on a positive note due to a recovery in oil prices. A supply shortage in Nigeria boosted oil prices. However, toward the end of the month, Brexit shook the market and increased volatility. The market recorded a sharp loss after the UK decided to leave the European Union. However, it recovered gradually, as the impact of Brexit on GCC economies was not very significant. On a YTD basis, the market fell 8%. Bahrain invited bids from leading consultancies to conduct major engineering studies for its Budaiya way Revamp project, which is being implemented as part of the Gulf Development Fund Program. A study on the Janabiya and Budaiya way Revamp project will look into the possibility of the construction of pedestrian bridges and expansion of the highway at points with higher pedestrian density. BSE Index and Volume Performance and Sectoral Performance 1, ,125 BSE 0.6% 1, Services 2.0% 1,115 1,110 1,105 1, Commercial Banks Investment Insurance 0.9% 0.2% 0.0% 1, Hotel & Tourism -1.5% Industrial -2.0% Volume (RHS) Index (LHS) -4% -2% 0% 2% 4% Sectoral performance In June, three sectors closed in the green, two in the red and one was flat. The Services sector (up 2%) was the key gainer, followed by Commercial Banks (0.9%) and Investment (0.2%). Industrial (down 2%) lost the most, followed by Hotel & Tourism (down 1.5%). Insurance was flat during the month. The Services sector recorded growth due to gains in Seef Properties Co. (up 2.7%), followed by Nass Corporation (up 12.5%), Bahrain Duty Free Shop Complex Co. (up 5.7%) and Bahrain Maritime & Mercantile International Co. (up 9.2%). Commercial Banks witnessed gains during the month, led by a rise in BBK (up 1.2%), which was followed by Al Ahli United Bank (up 2.4%) and National Bank of Bahrain (up 6%). Industrial recorded losses during the month due to a fall in Aluminium Bahrain Co. (down 2.1%). Hotel & Tourism declined due to losses in Gulf Hotels Group (down 1.5%) and Banader Hotel Co. (down 5.7%). Trading rises in June Trading on the BSE increased in June. The volume traded grew 219.3% to 82mn shares from 26mn, whereas the trading value rose 275.2% to USD0.05bn from USD0.01bn. 7

5 BSE Trading Statistics Top 5 Top Gainers Bahrain Cinema Co % Nass Corp Bsc % BMMI Bsc % Investcorp Bank* % NA NA National Bank Of Bahrain % Top 5 Losers Ithmaar Bank Bsc* % NA Bahrain Islamic Bank % Banader Hotels Co % NA United Gulf Bank % Khaleeji Commercial Bank % Top 5 Volume Volume (mn) Ithmaar Bank Bsc* % NA Bahrain Telecom Co % Seef Properties % BBK Bsc % Nass Corp Bsc % Top 5 Bahrain Telecom Co % Ithmaar Bank Bsc* % NA BBK Bsc % Ahli United Bank B.S.C* % Gulf Hotel Group B.S.C % Source: Bloomberg, Gulfbase & Global Research, *Price data in USD 5

6 Market capitalization The market capitalization of BSE-listed companies increased 0.7% to USD17.3bn in June. The market capitalization of the top 10 listed companies rose 1.7%. Largest 10 Listed Companies by Market Capitalization (in BHDbn) Jun-16 May-16 Jun-15 % YoY% Ahli United Bank B.S.C % -5.0% National Bank Of Bahrain % -17.5% Bahrain Telecom Co % -12.3% Arab Banking Corp % -46.3% Aluminium Bahrain Bsc % -44.4% BBK Bsc % -23.7% Albaraka Banking Group % -35.1% Al-Salam Bank % -34.0% Investcorp Bank NA 8.4% NA Gulf Finance House Ec % 0.1% Total Market Capitalization (Top 10 stocks) % -18.8% Source: Bloomberg and Global Research 6

7 1-Jun 9-Jun 19-Jun 27-Jun in mn Global Research GCC Kuwait KSE fell 0.7% in June The KSE fell 0.7% in June, after recording a 0.2% rise the previous month. The market traded at 5,300 5,500 points during the month. The market commenced the month on a positive note, supported by robust oil prices and increased money supply. Moreover, the anticipation of a positive outcome from the Brexit referendum added to the upward momentum. However, the unexpected outcome of the British referendum to exit the European Union hit investor sentiments. Consequently, the market fell considerably to end in the red. Data indicated a 23.4%YoY decline in Real Estate sales to KWD226.4mn for the year to date. Inflation declined slightly to 2.8% in May from 2.9% in April. M3 Money Supply strengthened 4.2%YoY in the month of March. KSE Index and Volume Performance and Sectoral Performance 5,510 5,440 5,370 5, KSE Consumer Services Oil & Gas Basic Material Technology Consumer Goods Insurance Health Care Telecommunication Industrial Financial Services Banks -0.7% 4.4% 3.8% 2.4% 2.3% 2.2% 0.8% 0.1% -0.5% -0.9% -1.8% -2.9% Volume (RHS) Index (LHS) Real Estate-3.4% -5% -2% 1% 4% 7% Sectoral performance In June, seven sectors closed higher, while five ended in the red. A rise in Consumer Services (4.4%), Oil & Gas (3.8%), Basic Material (2.4%), Technology (2.3%), Consumer Goods (2.2%), Insurance (0.8%), and Health Care (0.1%) helped the KSE end in the green. All other sectors registered a decline. Real Estate (-3.4%), Banks (-2.9%), Financial Services (-1.8%), Industrial (-0.9%), and Telecommunication (-0.5%) lost during the month. The rise in Consumer Services can be ascribed to gains in Kuwait National Cinema Co (21.4%) and Alrai Media Group Co (14.3%). Oil & Gas advanced, driven mostly by gains in National Petroleum Services Co (11.4%), followed by Independent Petroleum Group (1.5%). Heavyweight sector Real Estate contracted 3.4% during the month, mostly due to a fall in Mabanee Co. (- 5.1%), followed by Tamdeen Real Estate Co (-1.8%) and National Real Estate Co (-6.7%). Trading continued to decline in June Trading contracted in June, with traded value declining 7.9% (-11.1% in May) to USD0.7bn and volume traded falling 26.1% to 2.2bn shares. 7

8 KSE Index Trading Statistics Top 5 Top 5 Gainers Kuwait National Cinema Co % Al Kout Industrial Projects Co % Ekttitab Holding Co % NA Alrai Media Group Co % Real Estate Asset Management % Top 5 Losers Al Dar National Real Estate Co % Real Estate Trade Centers Co % Al Enmaa Real Estate Co % Salbookh Trading Co % Hayat Communications Co % Top 5 Volume Volume (mn) Hits Telecom Holding Co % NA Al-Salam Group Holding Co % NA Al Mal Investment Co % Coast Investment and Development Co % NA National Ranges Co % NA Top 5 National Bank of Kuwait % Kuwait Finance House % Kuwait Food Co % Boubyan Bank % National Investments % NA

9 Market capitalization The market capitalization of KSE-listed companies fell 1.7% to USD80.3bn in June, constituting 9.6% of the total GCC market capitalization. Furthermore, the market capitalization of the top 10 listed companies decreased 2.8%. Top 10 Listed Companies by Market Capitalization (in KWDbn) Jun-16 May-16 Jun-15 % YoY% National Bank of Kuwait SAK % -23.3% Kuwait Finance House KSC % -21.8% Mobile Telecommunications Co % -19.3% Kuwait Food Co SAK % -8.1% Boubyan Bank KSC % -6.1% Kuwait Projects Holding KSCC % -20.6% Gulf Bank KSC % -14.1% Burgan Bank SAK % -23.5% Ahli United Bank KSC % -23.8% Commercial Bank of Kuwait SAK % -30.2% Total Market Capitalization (Top 10 stocks) % -20.3% 9

10 1-Jun 7-Jun 13-Jun 19-Jun 23-Jun 29-Jun in mn Global Research GCC Oman MSM30 declines 0.6% in June The MSM30 declined 0.6% in June after falling 2.2% in May. The market started on a positive note, taking cues from its GCC peers. However, after the first week, the market started falling gradually due to lack of any positive catalyst. At the end of the month, the market reacted negatively to Brexit; a sharp fall was witnessed in the market. However, it gradually recovered. The market registered gains of 6.9% YTD. Oman's government sold a USD500mn six-year sukuk in a private placement. The sukuk's profit rate is 3.5%, and the ijara-structured instrument will be repaid in three equal installments after third year. Meanwhile, Oman raised a USD2.5bn two-part bond and a USD1bn loan from banks in January MSM30 Index & Volume and Sectoral Performance 6, MSM % 5, , Industrial 2.0% 9 Services & Insurance -0.6% 5,640 0 Banking & Investment -2.0% Volume (RHS) Index (LHS) -4% -2% 0% 2% 4% Source: Bloomberg, Gulfbase, & Global Research Sectoral performance In June, Industrial (2%) was the sole gainer. Banking and Investment (-2%) and Services and Insurance (- 0.6%) ended in the red. Industrial rose on gains in National Gas Co. (10.5%), followed by Raysut Cement Co. (8.3%), Al Jazeera Steel Products Co. (0.5%), and Al Maha Ceramics Co. (12.1%). Services and Insurance ended in the red owing to losses in Galfar Engineering & Contracting Co. (4.8%), Oman Telecommunications Co. (1.6%), and Phoenix Power Co. (3.2%). Banking and Investment declined owing to losses in Sohar Bank (-2.3%), Bank Muscat (-3.6%), Global Financial Inv. Co. (-7.1%), and HSBC Bank Oman (-4.9%). Trading declines in June In June, the trading on the MSM30 declined, with overall volume traded falling 3.2% to 294mn shares. Turnover declined 27.5% to USD0.2bn. 10

11 MSM30 Trading Statistics Top 5 Top 5 Gainers Al Maha Ceramics Co. SAOC % National Gas Co SAOG % Oman Educational and Training Investment Co SAOG % Raysut Cement Co SAOG % Oman Flour Mills Co SAOG % Top 5 Losers Oman Hotels and Tourism Co % Al Anwar Holdings SAOG % Al Omaniya Financial Services % National Pharmaceutical Industries Co SAOG % Global Financial Investments % Top 5 Volume Volume (mn) Bank Sohar SAOG % Bank Nizwa % NA Galfar Engineering and Contracting % NA HSBC Bank Oman % Global Financial Investments % Top 5 Bank Sohar SAOG % Bank Muscat SAOG % Galfar Engineering and Contracting % NA Oman Telecommunications Co % Bank Nizwa % NA Source: Bloomberg, Gulfbase, & Global Research 11

12 Market Capitalization In June, the market capitalization of MSM30-listed companies declined 0.9% to USD16bn, with that of the top 10 listed companies falling 0.5%. 10 Largest Listed Companies by Market Capitalization (in OMRbn) Jun-16 May-16 Jun-15 % YoY% Oman Telecommunications Co % -6.3% Bank Muscat SAOG % -25.1% Bank Dhofar SAOG % -8.9% Oman International Development and Investment Co SAOG % 103.1% National Bank of Oman SAOG % -21.8% Bank Sohar SAOG % 3.5% Raysut Cement Co SAOG % -13.8% Ahli Bank SAOG % -16.3% Phoenix Power Co % 7.4% Sembcorp Salalah Power & Wat % -7.0% Total Market Capitalization (Top 10 stocks) % -8.8% 12

13 1-Jun 9-Jun 19-Jun 27-Jun in mn Qatar QE rose 3.6% in June The QE was among the top performers among GCC markets in June, rising 3.6% to 9,885 points. Buying in index heavyweights as well as global cues boosted market sentiment, which helped the index snap its two-month losing streak to close in the green for June. On the economic data front, the consumer price inflation (YoY) for May came in at 2.6% as against 3.4% in the previous month. Qatar: Index, Volume, and Sectoral Performance 10,000 8 QE 3.6% 9,800 Real Estate 6.5% 9,600 4 Telecom Banks & FS 2.8% 5.6% 9,400 Industrial 1.5% 9,200 0 Insurance Transportation -0.2% 1.5% Consumer Goods -0.3% Volume (RHS) Index (LHS) -2% 0% 2% 4% 6% 8% Sectoral performance In June, most sectors ended in the green, except Consumer Goods and Transportation, which declined marginally. Real Estate (6.5%) was the best performer, followed by Telecom (5.6%), Banks & Financial Institutions (2.8%), Industrial (1.5%), and Insurance (1.5%). Among the losers, Consumer Goods (-0.3%) and Transportation (-0.2%) recorded a marginal fall. The surge in Real Estate can be ascribed to gains in Ezdan Holding Group (6.0%), Barwa Real Estate Co (8.9%), and United Development Co (6.4%), while Telecom was buoyed by Qatar Telecom Group, which climbed 7.8% in June. The rally in Banks & Financial Services was led by heavyweights which included Qatar National Bank (4.9%), Masraf Al Rayan (3.5%), and Qatar Islamic Bank (3.8%). Dlala Brokerage and Investment Holding Co. (16.2%), Barwa Real Estate Co (8.9%), and Qatar Telecom (7.8% ) were the top three gainers, while Ahli Bank (-10.6%), Medicare Group (-8.8%), and Qatari German for Medical Devices (-6.5%) lost the most. Trading contracts for third consecutive month in June Trading contracted in the QE for the third consecutive month in June. The value of shares traded declined 25.9% to USD0.72bn, while the volume of shares traded fell 36.3% to 63.7mn.

14 QE Index Trading Statistics Top 5 Top 5 Gainers Dlala Brokerage and Investment Holding Co QSC % NA Barwa Real Estate Co QSC % Qatar Telecom QSC % Widam Food Co QSC % National Leasing Holding Co % NA Top 5 Losers Ahli Bank QSC % Medicare Group QSC % Qatari German for Medical Devices QSC % NA Qatar First Investment Bank % NA NA NA NA NA NA Islamic Holding Group QSC % Top 5 Volume Volume (mn) Vodafone Qatar QSC % NA Qatar First Investment Bank % NA NA NA NA 7.81 NA Gulf International Services QSC % Ezdan Holding Group % Qatar Islamic Bank SAQ % Top 5 Qatar Islamic Bank SAQ % Qatar National Bank SAQ % Gulf International Services QSC % Industries Qatar QSC % Vodafone Qatar QSC % NA

15 Market capitalization The combined market capitalization of QE-listed companies increased 3.7% to USD121.9bn in June from USD117.6bn in May. The market capitalization of the top 10 listed companies declined 0.4%. Top 10 Listed Companies by Market Capitalization (QARbn) June-16 May-16 June-15 % YoY% Qatar National Bank SAQ % -1.3% Industries Qatar QSC % -5.5% Ezdan Holding Group % 15.7% Qatar Telecom QSC % 22.3% Masraf Al Rayan QSC % -9.0% Mesaieed Petrochemical Holding Co QSC % 1.9% Qatar Islamic Bank SAQ % -8.0% Qatar Electricity and Water Co QSC % -3.5% Qatar Insurance Co SAQ % 28.6% Qatar Fuel QSC % 15.2% Total Market Capitalization (Top 10 stocks) % 2.1% 15

16 1-Jun 7-Jun 13-Jun 19-Jun 23-Jun 29-Jun in mn Global Research GCC Saudi Arabia TASI rises 0.8% in June The TASI rose 0.8% in June. The index advanced in the first half of the month as investor sentiment rose due to better-than-expected Emirates NBD PMI data, which came in at 54.8 in May (54.2 in April), indicating an improvement in the manufacturing sector s economic health. Brent oil traded at USD per barrel during the month, well above this year s low of USD27 per barrel. Consequently, Saudi Arabia raised prices for crude exports to Asia and the US by 35 cents and 50 cents per barrel, respectively, boosting investor sentiment. Investors cheered the announcement of the National Transformation Plan. The plan highlighted the government s focus on developing the construction, tourism, medical, education, and mining sectors. Real Estate stocks Dar Al Arkan Real Estate Development and Jabal Omar Development soared after the government announced its intention to increase home ownership among Saudi nationals to 52% by 2020 from 47% currently. The TASI, however, remained subdued in the second half of the month as trading volumes remained low amid the festive season of Ramadan, during which local investors stayed away from the market. Moreover, global cues remained weak amid ongoing discussions surrounding Brexit and weak oil prices. TASI: Index, Volume, and Sectoral Performance 6,750 6,525 6,300 Volume (RHS) Index (LHS) TASI Energy & Utilities Real Estate Dev. Building & Const. Telecom & IT Cement Insurance Retail Banks & FS -0.8% Agri & Food -0.8% Petrochemical -1.7% Industrial Inv. -1.8% Transport -2.9% Multi-Inv. -2.9% Hotel & Tourism -4.9% Media and Publishing -6.5% 0.8% 4.2% 1.7% 1.5% 1.1% 0.7% 10.1% 18.6% -10% -5% 0% 5% 10% 15% 20% Source: TASI, Gulfbase, & Global Research Sectoral performance Seven sectors ended June in the green, while eight ended in the red. Energy & Utilities (18.6%) led gainers, followed by Real Estate (10.1%), Building & Construction (4.2%), Telecom & IT (1.7%), Cement (1.5%), Insurance (1.1%), and Retail (0.7%). Banking & Financial Services (-0.8%), Agriculture & Food (-0.8%), Petrochemical (-1.7%), Industrial Investment (-1.8%), Transport (-2.9%), Multi- Investment (-2.9%), Hotel & Tourism (-4.9%), and Media & Publishing (-6.5%) declined. The surge in Energy & Utilities could be ascribed to a rise in Saudi Electricity (19.3%) and National Gas and Industrialization Co (22.3%). Real Estate advanced, led by gains in Jabal Omar Development Co (10.7%) and Dar Al Arkan Real Estate Dev Co (29.9%). Media & Publishing declined due to losses in Saudi Research and Marketing Group (-7.5%), Saudi Printing and Packaging Co (-3.4%), and Tihama Advertising Public Relation (-6.9%). 16

17 Trading declines in June Trading on the TASI remained subdued in June. The volume of shares traded dropped 12.7% to 4.8bn in June from 5.5bn in May. Moreover, the value of shares traded declined 27.9% to USD22bn in June from USD30.5bn in May. TASI Index Trading Statistics Top 5 Top 5 Gainers Arabian Pipes Co % NA Dar Al Arkan Real Estate Dev % , National Gas and Industrialization Co Saudi United Cooperative Insurance Co % % NA Saudi Electricity Co % Top 5 Losers Amana Cooperative Insurance % Al Yamamah Steel % NA NA Al-Ahlia Insurance Co % NA Arabia Insurance Cooperative % NA Saudi Enaya Cooperative Insurance Co Top 5 Volume % NA Volume (mn) Dar Al Arkan Real Estate Dev % , Alinma Bank % , Saudi Kayan Petrochemical Co % NA Saudi Basic Industries Corp % Saudi Electricity Co % Top 5 Alinma Bank % , Saudi Basic Industries Corp % , Dar Al Arkan Real Estate Dev Co % , Saudi Kayan Petrochemical Co % NA Saudi Electricity Co % Source: Bloomberg, Gulfbase, and Global Research 17

18 Market capitalization The market capitalization of companies listed on the TASI increased 1.5% to USD400.6bn in June from USD394.7bn in May. The market capitalization of the top 10 listed companies rose 1.4% in June. Top 10 Listed Companies by Market Capitalization (SARbn) Jun-16 May-16 Jun-15 % YoY% Saudi Basic Industries Corp % -14.6% Saudi Telecom Co % -4.6% Al Rajhi Banking and Invest Corp % -4.0% Saudi Electricity Co % 13.5% National Commercial Bank % -36.0% Jabal Omar Development Co % -15.2% Almarai Co % -18.9% Saudi Arabian Mining Co % -7.4% Kingdom Holding Co % -49.4% Samba Financial Group % -23.1% Total Market Capitalization (Top 10 stocks) % -16.1% 18

19 1-Jun 7-Jun 13-Jun 19-Jun 23-Jun 29-Jun in mn Global Research GCC UAE Abu Dhabi ADX rose 5.8% in June The ADX was the top gainer in June among GCC markets, rising 5.8%. The index started the month on a positive note, primarily due to strong PMI data and a surge in oil prices. During the first half of the month, talks of a possible merger between National Bank of Abu Dhabi (NBAD) and First Gulf Bank (FGB) significantly bolstered investor sentiment, which helped the ADX surge to its six-month high. The merger would create the largest banking entity in MENA in terms of assets (approximately USD170bn). The Emirates NBD PMI reading for the UAE rose to 54.0 in May from 52.8 in April, which impacted investor sentiment. Moreover, M3 money supply growth decelerated on a basis. Local investor participation in the market was relatively subdued for the entire month due to Ramadan. ADX: Index, Volume, and Sectoral Performance 4,600 ADX 5.8% 360 Telecom 7.1% 4, Banks Services 6.9% 6.7% 4, Consumer Real Estate Industrial Investment & FS -0.5% 0.1% 1.8% 5.2% 4,000 0 Energy -0.6% Insurance -3.2% Volume (RHS) Source: Bloomberg, Gulfbase, & Global Research Index (LHS) -5% 0% 5% 10% Sectoral performance Of the nine sectors, six ended in the green in June. Telecom (7.1%), Banks (6.9%), Services (6.7%), Consumer (5.2%), Real Estate (1.8%), and Industrial (0.1%) ended in the green. Among the losers, Insurance (-3.2%), Energy (-0.6%Mom), and Investment and Financial Services (-0.5%) closed in the red. The increase in Telecom was led by a 7.1% rise in Emirates Telecommunication Corp, which offset the decline in Qatar Telecom (-9.8%) and Sudatel Telecom Group Ltd (-2.0%). Banking stocks recorded a mixed performance; however, the sector rose due to a rally in sector heavyweights. First Gulf Bank (6.3%), National Bank of Abu Dhabi (23.9%), Abu Dhabi Commercial Bank (1.5%), Abu Dhabi Islamic Bank (1.1%), and Union National Bank (19.5%) contributed to the rise. Trading remains low in June Trading on the ADX was subdued in June. The volume of shares traded declined 31.2% to 1.3bn in June from 1.9bn in May. Moreover, the value of shares traded increased 16.8% to USD1bn in June. 19

20 ADX Trading Statistics Top 5 Top 5 Gainers Foodco Holding PJSC % National Bank of Abu Dhabi PJSC % Union National Bank PJSC % Emirates Driving Co PJSC % Abu Dhabi National Hotels Co % Top 5 Losers Abu Dhabi National Insurance Co % NA Abu Dhabi National Energy Co PJSC % NA Qatar Telecom % Abu Dhabi Aviation % Finance House PJSC % Top 5 Volume Volume (mn) Eshraq properties Co % Aldar Properties PJSC % RAK Properties PJSC % Dana Gas Co PJS % Methaq Takaful Insurance Co PSC % NA Top 5 Emirates Telecommunication Corp % Aldar Properties PJSC % First Gulf Bank PJSC % Abu Dhabi Commercial Bank PJSC % National Bank of Abu Dhabi PJSC % Source: Bloomberg, Gulfbase, & Global Research 20

21 Market capitalization In June 2016, the combined market capitalization of companies listed on the ADX increased 6.7% to USD119.2bn. The market capitalization of the top 10 listed companies rose 2.3%. Top 10 Listed Companies by Market Capitalization (AED bn) Jun-16 May-16 Jun-15 % YoY% Emirates Telecommunication Corp Ltd % 17.4% First Gulf Bank PJSC % 2.4% National Bank of Abu Dhabi PJSC % 11.6% Abu Dhabi Commercial Bank PJSC % 0.2% Aldar Properties PJSC % 17.2% Abu Dhabi Islamic Bank PJSC % 2.8% Union National Bank PJSC % -23.7% National Bank of Ras Al Khaimah PSC % -15.0% National Bank of Umm Al Qaiwain PSC % 0.0% National Bank of Fujairah PSC % 11.5% Total Market Capitalization (Top 10 stocks) % 8.8% 21

22 1-Jun 7-Jun 13-Jun 19-Jun 23-Jun 29-Jun in mn Global Research GCC UAE Dubai DFM dips 0.1% in June The DFM declined 0.1% in June. The markets were flat or positive during the major part of the month, mainly due to the Fed Chair s dovish statement, which eased concerns of an early interest rate hike, and flattish oil prices. However, in the latter half of the month, the historic UK vote to leave the EU dampened investor sentiment. The UAE consumer price inflation (YoY) for May came in marginally lower at 1.62% compared with 1.63% for April. Furthermore, the UAE central bank s assets dipped in May. Local investor participation in the market was relatively subdued for the entire month due to Ramadan, which is reflected in the significant decline in trading volume. DFM: Index, Volume, and Sectoral Performance 3, DFM Consumer Staples -0.1% 9.6% 3,300 Investment & FS Industrial 0.0% 3.6% 3, Telecom Real Estate & Const. Insurance -0.2% -0.2% -0.4% Services -1.0% 3,100 0 Banks -1.5% Transportation -2.1% Volume (RHS) Index (LHS) -4% -2% 0% 2% 4% 6% 8% 10% 12% Sectoral performance In June, two of nine sectors ended in the green, while Industrial closed flat and others declined. Consumer Staples was the top performer (9.6%), followed by Investment & Financial Services (3.6%). Transportation (- 2.1%) was the biggest loser, followed by Banks (-1.5%), Services (-1%), Insurance (-0.4%), Real Estate & Construction (-0.2%), and Telecom (-0.2%). Consumer Staples advanced, supported by a 9.9% gain in Dubai Parks & Resorts. Investment & Financial Services rose, driven by a 2.4% increase in Dubai Financial Market PJSC and a 4.6% gain in Dubai Investment. Transportation declined due to losses in Air Arabia (-2.2%) and Gulf Navigation Holding (- 4.6%). Seven of the 11 banks ended the month in the red, while three remained unchanged and Dubai Islamic Bank (0.2%) rose. The top losers among banks were Al Salam Bank Sudan (-17.8%), followed by Mashreq Bank (-10%), and Commercial Bank of Dubai (-4.3%). Trading falls in June Trading on the DFM declined in June. The volume of shares traded dropped 12% to 3.8bn. Moreover, the value of shares traded decreased 7.4% to USD1.6bn in June from USD1.7bn in May. 22

23 DFM Trading Statistics Top 5 Top 5 Gainers Takaful House % NA Dubai Parks & Resorts PJSC % NA Dubai Islamic Insurance and Reinsurance Co PSC % Dubai Investment PJSC % National Central Cooling Co PJSC % Top 5 Losers Dubai Refreshments PJSC % Al Salam Bank Sudan % NA NA NA NA NA NA Gulfa Mineral Water and Processing Industries Co PLC % NA United Foods Co PSC % Mashreqbank PSC % Top 5 Volume Volume (mn) Dubai Parks & Resorts PJSC % NA Union Properties PJSC % Arabtec Holding PJSC % NA Drake and Scull International % NA Deyaar Development PJSC % Top 5 Dubai Islamic Bank PJSC % Dubai Parks & Resorts PJSC % NA Emaar Properties PJSC % Arabtec Holding PJSC % NA Union Properties PJSC % Source: Bloomberg, Gulfbase, & Global Research 23

24 Market capitalization The combined market capitalization of companies listed on the DFM fell 0.3% to USD79.7bn in June. The market capitalization of the top 10 listed companies rose 3.4%. Top 10 Listed Companies by Market Capitalization (AED bn) June-16 May-16 June-15 % YoY% Emaar Properties PJSC % 19.5% Emirates NBD Bank PJSC % 11.8% Emaar Malls % 5.1% Emirates Integrated Telecommunications Co % 26.5% Dubai Islamic Bank PJSC % -5.2% Commercial Bank of Dubai PSC % -10.2% Mashreqbank PSC % -1.1% DAMAC Properties Dubai Co PJSC % 11.2% Dubai Financial Market PJSC % 24.4% Dubai Parks & Resorts PJSC % 18.6% Total Market Capitalization (Top 10 stocks) % 10.0% 24

25 Appendix 1: MENA and Global market performance in June 2016 Indices Up/Down () (YTD) (x) (x) Div Yield (%) KSE Weighted Index % -7.9% KSE Price Index 5, % -4.5% Tadawul All Share Index 6, % -6.0% DFM Index 3, % 5.1% ADX Index 4, % 4.4% Bahrain All Share 1, % -8.0% QE Index 9, % -5.2% MSM30 Index 5, % 6.9% Levant & North Africa Markets Up/Down () (YTD) (x) (x) Div Yield (%) Egypt - EGX30 6, % -0.9% Egypt-- EGX % -7.3% Jordan-- Amman Fr Flt Index 2, % -2.1% Palestine - AlQuds Index % -5.4% 9.0 NA 2.0 Lebanon - BLOM Stk Index* 1, % -1.7% Morocco - CASA All Share index* 9, % 6.5% Tunisia - Tunisia Main Index* 5, % 4.9% International Indices Up/Down () (YTD) (x) (x) Div Yield (%) DJ Average 17, % 2.9% NASDAQ Composite 4, % -3.3% S&P500 Comp. 2, % 2.7% FTSE UK 6, % 4.2% Extra DAX 9, % -9.9% CAC 40 - France 4, % -8.6% International Indices Up/Down () (YTD) (x) (x) Div Yield (%) Bovespa Index 51, % 18.9% RTS Index % 22.9% Bombay SE SENSEX -India 27, % 3.4% SSE Composite Index - Shanghai 2, % -17.2% NIKKEI 225 INDEX- Japan 15, % -18.2% Hang Seng - Hong Kong 20, % -5.1% Source: Bloomberg and Global Research 25

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