Weekly Investment Report

Transcription

1 Economic & Market News Reuters: U.S. industrial production rose in January after three straight months of declines, buoyed by a strong utilities index and growing manufacturing sector. Industrial output increased.9% after a downwardly revised.7% decline in December. The industrial sector measured by the Fed comprises manufacturing, mining, and electric and gas utilities. A massive blizzard in the northeastern United States late in January likely held down production by a small amount, but it was also boosted by a marked rise in demand for heating after what had been an unseasonably warm winter. The rise in output also reflected a.5% increase in manufacturing. The mining index was flat last month and down 9.8% from the same period a year ago. With output on the rise, the percentage of industrial capacity in use rose to 77.1% from a downwardly revised 76.4% in December. Reuters: Rating agency S&P has downgraded Saudi Arabia, Brazil, Kazakhstan, Bahrain and Oman's credit ratings last week, in its second mass cut of large oil producers in almost exactly a year. S&P cited the pressures being created by the drop in oil prices for the moves which included double-notch downgrades of Saudi Arabia to A- stable from A+ negative and stripping Bahrain of its investment grade status. "The decline in oil prices will have a marked and lasting impact on Saudi Arabia's fiscal and economic indicators given its high dependence on oil," according to S&P. The plunge in oil prices since mid-214 had already brought a blizzard of downgrades for oil producers, including Saudi Arabia, Russia, Brazil and Venezuela, where the oil rout has raised fears of a sovereign default. One country that was spared this time was Russia. For the Middle East there is far more intense pressure from low oil because many currencies, including the Saudi riyal, are pegged to the dollar, limiting scope for currency weakness that could stimulate the economy. Authorities are also having to dig into reserves to keep spending at levels that support their highly dependent economies. Like Saudi Arabia, Bahrain saw its rating cut two notches. Significantly, though, it also lost investment grade as it went to BB from BBBand Oman was lowered two steps as well to BBB- stable from BBB+ negative. Al Masah Capital: Good week for the bulls as they stemmed the perception that sellers were retaking control of the markets by posting another positive week and clawing back losses from the preceding week. The weekly gain of 2.5% was held up by all the major markets but in particular by the 5% jump in Qatar and the 3.9% recovery by Saudi, followed by UAE with 3.6% appreciation and 2.2% rise by Egypt. A certain trend is now quite evident as we head into the close of the 2 nd month of the year. Buyers are now clearly gravitating towards UAE and Qatar both are only down 2% and 4% on the year which sounds reasonably impressive given the January damage. But the clear losers are Saudi and Egypt as they have only marginally recovered from the Jan lows and both remain deeply in the red for the year both down 15% annually. A two tier market has emerged in the region and it plays into the narrative that UAE and Qatar are better placed to ride out lower oil prices while Saudi s over-dependence on oil revenue is not going to change the short-medium term picture. Egypt is a standalone puzzle because instead of benefiting from the oil price collapse (as a net importer) its internal issues such as currency value and lack of progressive policy implementation keep it mired in an environment of poor investor returns. As we head into the last trading week of February, the bulls will desperately try to keep the gains and close out the month on a positive which could be a small but meaningful victory. Indexes Last WTD (%) MTD (%) YTD (%) Dubai (DFMGI) 3, % 3.17% -1.84% Abu Dhabi (ADSMI) 4, % 3.91% -2.19% Saudi (SASEIDX) 5, % -1.87% % Kuwait (KWSE) 5, %.52% -8.44% Egypt (EGX3) 5, % -.81% % Qatar (DSM) 9, % 5.13% -4.43% Bahrain (BHSEIDX) 1, % -1.23% -3.57% Oman (MSM3) 5, % 4.63%.24% TR GCC (Reuters) % 4.28% -3.82% DJ MENA % 1.13% -8.61% Commodities & FX Last WTD (%) MTD (%) YTD (%) Oil (Brent) % -4.98% % Natural Gas % -21.5% % Gold % 9.86% 15.73% Silver % 7.51% 1.85% EURUSD % 3.69% 2.47% GBPUSD % -5.79% -2.27% USDJPY % -8.39% -6.6% USDCHF % -2.2% -1.2% AUDUSD.71.93% -.61% -1.75% USDCAD % 3.64% -.55% Indexes Last WTD (%) MTD (%) YTD (%) DJI 16, % -.45% -5.93% S&P 5 1, % -1.16% -6.17% NASDAQ 4, % -2.69% -9.34% STOXX Europe % -4.65% -1.78% FTSE 1 5, % -2.2% -4.68% DAX 9, % -4.19% % LIBOR US Dollar WoW (%) Euro WoW (%) 1 Month % % 2 Month % % 3 Month % % 6 Month % % 12 Month % % CAC 4 4, % -4.39% -8.93% Nikkei , % -8.85% % SENSEX 23, % -4.67% -9.22% Shanghai Composite 2, % 4.47% % Hang Seng 19, % -2.2% -12.% 1

2 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Economic & Market News (continued) Reuters: Saudi Arabia's central bank has raised the ratio of deposits which commercial banks can lend out to 9% from 85%. Liquidity has tightened over the past year as low oil prices have reduced inflows of new state revenues and prompted the government to issue bonds to banks to cover a budget deficit that totalled nearly $1 billion last year. That threatens to slow economic growth; the three-month Saudi interbank offered rate has jumped to 1.73%, the highest level in seven years, from below.8% in mid-215. By making more money available for lending, the rise in the loan-to-deposit ratio could at least temporarily prevent corporate loan rates from rising further, benefiting Saudi companies. The loan-to-deposit ratio is designed to limit risk in the banking system by preventing banks from lending too generously. However, raising it by 5% is unlikely to prove dangerous. In fact 85% is a conservative level compared to regional banks in the United Arab Emirates and Qatar, which allow the level to reach more than 1%. Reuters: China's January trade performance was worse than expected as tepid demand persisted both at home and abroad, raising expectations of further government measures to arrest the slowdown and to quell market jitters. January exports fell 11.2% from a year earlier - the seventh straight month of decline, while imports tumbled 18.8% - the 15th month of decline, both far worse than expected. Exports declined even though China has allowed the yuan CNY=CFXS to weaken nearly 6% against the U.S. dollar since last August, underlining the extent to which global demand has weakened. China posted a record trade surplus of $63.3 billion in January - partly due to soft demand and falling commodities prices, versus $6.9 billion in December. The record level trade surplus indicates that China continued to run a large current account surplus, and this should help offset some of the capital outflow and alleviate some depreciation pressure on the renminbi (yuan). China will keep the yuan basically stable against a basket of currencies and it will not allow speculators to dominate market sentiment regarding China's foreign exchange reserves. Zawya: The full-year results of UAE banks are a mixed bag, with some reporting an increase in profitability, some a decline in profitability and others in the red something that points to the different impact the challenging economic environment has had on bank balance sheets. the results are a reflection of challenges in both domestic and global economic environments that have led to rising costs, shrinking margins and higher provisions, Notable exceptions to the overall declining trend were large lenders such as Emirates NBD, First Gulf Bank (FGB) and Abu Dhabi Commercial Bank (ADCB). The strong performance was helped by income growth and a lower impairment charge. Standard & Poor s expects a slowdown in credit growth and continued weaker deposit growth, with a renewed but manageable deterioration in asset quality. All of these factors combined should result in negative earnings growth for the banks in 216 and a lacklustre performance in US Government Bonds - Yield to Maturity (%) M 3M 6M 12M 2Y 5Y 1Y 3Y Last Week Current Week Global Equity Indexes - Rebased 4 CBOE S&P Volatility Index - VIX Oct-14 Dec-14 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 S&P 5 STOXX Europe 6 TR MENA Nikkei 225 MSCI Asia ex. Japan MENA Market - Price Ratios PE PB Year CDS Rates (basis points) Dubai Abu Dhabi Saudi Kuwait Egypt Qatar Bahrain Oman Average - - Dubai Abu Dhabi Saudi Kuwait Egypt Qatar Bahrain Oman Average 2

3 Government Bonds Government Bond Name Currency Maturity Coupon Current Yield (%) YTM - Ask (%) Rating Bid Ask UAE - Emirate of Dubai DUBAI DOF SUKUK LTD USD 2/5/ UAE - Emirate of Abu Dhabi ABU DHABI GOVT INT'L USD 8/4/ AA United States of America US TREASURY N/B USD 31/5/ Aaa United Kingdom of Great Britain UK TSY 4 3/4% 22 GBP 7/3/ AAA Kingdom of Bahrain KINGDOM OF BAHRAIN USD 31/3/ UAE - Emirate of Dubai DUBAI GOVT INT'L BONDS USD 5/1/ United States of America US TREASURY N/B USD 15/5/ Aaa State of Qatar STATE OF QATAR USD 15/6/ AA Arab Republic of Egypt ARAB REPUBLIC OF EGYPT USD 3/4/ B United States of America US TREASURY N/B USD 15/5/ Aaa Kingdom of Bahrain KINGDOM OF BAHRAIN USD 19/9/ BB Corporate Bonds Government/Parent Company Bond Name Currency Maturity Coupon Current Yield (%) YTM - Ask (%) Rating Bid Ask Qatar Petroleum RAS LAFFAN LNG 3 USD 3/9/ Aa Abu Dhabi Water & Electricity TAQA ABU DHABI NATL ENER USD 1/8/ A Abu Dhabi Water & Electricity TAQA ABU DHABI NATL ENER USD 16/9/ A Qatar Petroleum RAS LAFFAN LNG 3 USD 3/9/ Aa National Bank of Oman NATIONAL BANK OF OMAN USD 7/1/ A Qatari Diar Real Estate Invest QATARI DIAR FINANCE QSC USD 21/7/ AA Stichting Waha Aerospace WAHA AEROSPACE BV USD 28/7/ AA Qatar Petroleum RAS LAFFAN LNG II USD 3/9/ Aa Investment Corp of Dubai EMIRATES NBD PJSC EUR 23/3/ Baa Saudi Electricity Co SAUDI ELECTRICITY GLOBAL USD 3/4/ A Emaar Malls Group PJSC EMG SUKUK LTD USD 18/6/ Baa Emirate of Sharjah United Arab SHARJAH SUKUK LTD USD 17/9/ A Qatar Petroleum RAS LAFFAN LNG 3 USD 3/9/ Aa Qatar Gas Transport Co Ltd NAKILAT INC USD 31/12/ A Port & Free Zone World FZE DP WORLD LTD USD 2/7/ BBB Burgan Bank SAK BURGAN TIER 1 FINANCING USD Perpetual Emirates NBD PJSC EMIRATES NBD 214 TIER 1 USD Perpetual Thomson Reuters composite rating; NR = No Rating 3

4 Bahrain Qatar Egypt Kuwait Saudi UAE Money Markets EIBOR SAIBOR KIBOR 1 Week 1 Month 2 Months 3 Months 6 Months 12 Months N/A T/N 1 Week 1 Month 2 Months 3 Months 6 Months 9 Months 12 Months Year 2 Years 3 Years 4 Years 5 Years 7 Years 1 Years Month 2 Months 3 Months 6 Months 9 Months 12 Months T/N 1 Week 1 Month 2 Months 3 Months 6 Months 9 Months 12 Months Year 2 Years 3 Years 4 Years 5 Years 7 Years 1 Years O/N 1 Month 3 Months 6 Months 1 Year 2 Years 3 Years N/A N/A O/N T/N 1 Week 1 Month 2 Months 3 Months 6 Months 9 Months 12 Months Year 2 Years 3 Years 4 Years 5 Years 7 Years 1 Years EGIBR Bank Rates T-Bill Yields QIBOR QCB Interest Rates O/N < 1 Week 1 Week < 1 Month 1 Month > 1 Month Re Discount Lending Benchmark Week 1 Month 3 Months 6 Months 9 Months 1 Year 2 Years 3 Years O/N 1 Week 1 Month 2 Months 3 Months 6 Months 9 Months 12 Months Week 1 Month 2 Months 3 Months 6 Months 9 Months 12 Months O/N Deposit O/N Lending Repo Rate BHIBOR Interest Rates O/N 1 Week 1 Month 2 Months 3 Months 6 Months 9 Months 12 Months O/N Deposit 1W Deposit O/N Repo O/N Secured Year 2 Years 3 Years 4 Years 5 Years 7 Years 1 Years

5 Qatar Egypt Kuwait Saudi Abu Dhabi Dubai Top Weekly Performers by Country ( indicates native currency; Data as of the previous Thursday) OMAN INSURANCE CO PSC % -7.41% 924 DUBAI INVESTMENTS PJSC % -1.4% 7,33 GULF NAVIGATION HOLDING PJSC.9 1.7% 45.16% 496 DEYAAR DEVELOPMENT PJSC % -.19% 2,964 DUBAI PARKS AND RESORTS PJSC % 3.54% 7,397 DUBAI REFRESHMENTS PJSC % -4.88% 1,755 GULF GENERAL INVESTMENT CO PSC % -2.24% 939 MARKA PJSC % 4.17% 625 ARABTEC HOLDING PJSC % -13.6% 4,984 EMIRATES INTEGRATED TELECOM CO % 13.53% 26,469 AXA GREEN CRESCENT INSURANCE CO % 53.33% 115 METHAQ TAKAFUL INSURANCE CO % 8.33% 98 RAS AL KHAIMAH CERAMICS PSC % -2.58% 2,78 ABU DHABI COMMERCIAL BANK PJSC % 1.67% 37,49 ALDAR PROPERTIES PJSC % 7.33% 19,578 AL BUHAIRA NATIONAL INSURANCE % -2.8% 68 UNITED ARAB BANK PJSC % -2.7% 5,913 NATIONAL BANK OF FUJAIRAH PJSC % 3.68% 5,664 RAS AL KHAIMAH CEMENT CO PSC % % 442 AL DHAFRA INSURANCE CO PSC % -8.33% 44 (SAR mln) (SAR mln) NATIONAL METAL MFG & CASTING CO % -6.45% 673 HSBC AMANAH SAUDI 2 ETF % % - SAUDI INDUSTRIAL EXPORT CO SJSC % 13.67% 485 DUR HOSPITALITY CO SJSC % -8.43% 2,445 YANBU NATIONAL PETROCHEM CO % -2.46% 17,83 SAUDI INTL PETROCHEMICAL CO SJSC % % 4,473 SAUDI ENAYA COOP INSURANCE CO % % 38 SAUDI CHEMICAL CO SJSC % % 2,656 AL ABDULLATIF INDUSTRIAL INVEST % % 1,324 NATIONAL MEDICAL CARE CO JSC % % 1,87 (fils) (KWD mln) (fils) (KWD mln) YIACO MEDICAL CO KSC % 32.39% 34 CREDIT RATING AND COLLECTION CO % 9.52% 8 KUWAIT REAL ESTATE HOLDING CO % % 4 NAFAIS HOLDING CO KSCC % -26.9% 57 AL MAL INVESTMENT CO KSCC %.% 22 AL SAFAT REAL ESTATE CO KSCC % % 3 AL DAR NATIONAL REAL ESTATE CO % % 8 AL SAFAT ENERGY HOLDING CO KPSC % % 5 ZIMA HOLDING CO KSC HOLDING % % 9 KUWAIT FOOD CO KSCP 2, % 9.% 876 (EGP mln) (EGP mln) BELTONE FINANCIAL HOLDING SAE % 87.57% 1,154 INTL CO FOR MEDICAL INDUSTRIES % -4.76% 1 EGYPT SOUTH AFRICA FOR COMMUNI % -12.9% 17 EGYPTIAN STARCH & GLUCOSE MFG % 7.19% 329 NAEEM HOLDING FOR INVESTMENTS % 2.44% 119 GOLDEN COAST EL SOKHNA COMPANY % 27.93% 83 EL WADI CO FOR TOURISTIC INVEST % 52.15% 251 GRAND CAPITAL FOR FINANCIAL INVES % % 28 ORASCOM CONSTRUCTION INDUSTRI % -9.4% 45,438 KAHIRA PHARMA & CHEMICAL INDU % -1.71% 173 (QAR mln) (QAR mln) SALAM INTERNATIONAL INVESTMENT % 4.99% 1,419 QATAR FUEL QSC % 1.85% 13,89 MANNAI CORPORATION QSC % -1.15% 4,297 BARWA REAL ESTATE CO QSC % -6.5% 14,553 UNITED DEVELOPMENT CO PSC % 4.% 7,641 AL KHALEEJ TAKAFUL GROUP QSC % % 634 GULF WAREHOUSING CO QSC % -23.9% 2,538 QATAR CINEMA AND FILM DISTRIBUTI % % 177 AAMAL CO QSC % % 7,428 ISLAMIC HOLDING GROUP QSC % % 322 5

6 Top 5 MENA Stocks by Market Capitalization ( indicates native currency; Latest data) Company Name Country Market Cap (USD mln) MTD % YTD % 52w High 52w Low P/E P/B Dividend Yield 1 SAUDI BASIC INDUSTRIES CORP SJSC SA 56, % -8.1% % 2 EMIRATES TELECOM GROUP CO PJSC AE 38, % 1.6% % 3 SAUDI TELECOM CO SJSC SA 34, % -4.4% % 4 QATAR NATIONAL BANK SAQ QA 31, % -5.1% % 5 AL RAJHI BANKING AND INVESTMENT CORP SA 22, % 1.9% % 6 NATIONAL COMMERCIAL BANK SJSC SA 2, % -22.9% % 7 INDUSTRIES QATAR QSC QA 17, % -3.1% % 8 SAUDI ELECTRICITY CO SJSC SA 16, % -7.9% % 9 FIRST GULF BANK PJSC AE 15, % -3.2% % 1 DP WORLD LTD AE 14, % -13.8% % 11 NATIONAL BANK OF KUWAIT SAK KW 11, % -11.3% % 12 JABAL OMAR DEVELOPMENT CO SJSC SA 11, % -13.3% % 13 NATIONAL BANK OF ABU DHABI PJSC AE 11, % 2.4% % 14 EMAAR PROPERTIES PJSC AE 11, %.% % 15 KINGDOM HOLDING CO SA 11, % -28.7% % 16 EMIRATES NBD BANK PJSC AE 11, % -1.4% % 17 SAMBA FINANCIAL GROUP SJSC SA 1, % -13.7% % 18 EZDAN HOLDING GROUP QSC QA 1, % -8.2% % 19 ABU DHABI COMMERCIAL BANK PJSC AE 1, % 1.7% % 2 SAUDI ARABIAN MINING CO SJSC SA 1, % -1.8% % 21 ALMARAI CO SJSC SA 1, % -19.5% % 22 EMAAR MALLS GROUP PJSC AE 9, % -6.5% % 23 RIYAD BANK SJSC SA 8, % -1.5% % 24 SAUDI BRITISH BANK SJSC SA 8, % -18.4% % 25 MASRAF AL RAYAN QSC QA 7, % -.4% % 26 KUWAIT FINANCE HOUSE KSCP KW 7, % -11.1% % 27 OOREDOO QSC QA 7, % 14.7% % 28 BANQUE SAUDI FRANSI SJSC SA 7, % -18.4% % 29 SAUDI ARABIA FERTILIZERS CO SJSC SA 7, % -2.9% % 3 EMIRATES INTEGRATED TELECOM CO PJSC AE 7, % 13.5% % 31 EMAAR MALLS GROUP PJSC AE 9, % -6.5% % 32 QATAR ISLAMIC BANK SAQ QA 6, % -4.% % 33 DUBAI ISLAMIC BANK PJSC AE 6, % -2.6% % 34 QATAR ELECTRICITY AND WATER CO QSC QA 6, % -4.8% % 35 MESAIEED PETROCHEMICAL HOLDING CO QA 6, % -8.7% % 6

7 Top 5 MENA Stocks by Market Capitalization Continued ( indicates native currency; Latest data) Company Name Country Market Cap (USD mln) MTD % YTD % 52w High 52w Low P/E P/B Dividend Yield 36 ORASCOM CONSTRUCTION INDUSTRIES EG 5, % -9.4% % 37 SAVOLA GROUP CO SJSC SA 5, % -21.1% % 38 ALDAR PROPERTIES PJSC AE 5, % 7.3% % 39 ALINMA BANK SJSC SA 5, % -11.5% % 4 MOBILE TELECOMMUNICATIONS CO KSC KW 5, %.% % 41 ARAB NATIONAL BANK SA 4, % -23.% % 42 COMMERCIAL INTL BANK EGYPT SAE EG 4, % -14.7% % 43 YANBU NATIONAL PETROCHEMICALS CO SA 4, % -2.5% % 44 ETIHAD ETISALAT CO SJSC SA 4, % -2.9% % 45 QATAR INSURANCE CO SAQ QA 4, % 7.9% % 46 COMMERCIAL BANK OF DUBAI PSC AE 4, % -11.1% % 47 AHLI UNITED BANK BSC BA 4, % -6.5% % 48 DAMAC PROPERTIES DUBAI CO PSC AE 4, % 6.9% % 49 BARWA REAL ESTATE CO QSC QA 3, % -6.5% % 5 MASHREQBANK PSC AE 3, %.% % Total MCap; Weighted Avg Div Yield 566,281 4.% Disclaimer: This report is prepared by Al Masah Capital Management Limited ( AMCML ). AMCML is a company incorporated under the DIFC Companies Law and is regulated by the Dubai Financial Services Authority ( DFSA ). The information contained in this report does not constitute an offer to sell securities or the solicitation of an offer to buy, or recommendation for investment in, any securities in any jurisdiction. The information in this report is not intended as financial advice and is only intended for professionals with appropriate investment knowledge and ones that AMCML is satisfied meet the regulatory criteria to be classified as a Professional Client as defined under the Rules & Regulations of the appropriate financial authority. Moreover, none of the report is intended as a prospectus within the meaning of the applicable laws of any jurisdiction and none of the report is directed to any person in any country in which the distribution of such report is unlawful. This report provides general information only. The information and opinions in the report constitute a judgment as at the date indicated and are subject to change without notice. The information may therefore not be accurate or current. The information and opinions contained in this report have been compiled or arrived at from sources believed to be reliable in good faith, but no representation or warranty, express, or implied, is made by AMCML, as to their accuracy, completeness or correctness and AMCML does also not warrant that the information is up to date. Moreover, you should be aware of the fact that investments in undertakings, securities or other financial instruments involve risks. Past results do not guarantee future performance. We accept no liability for any loss arising from the use of material presented in this report. This document has not been reviewed by, approved by or filed with the DFSA. This report or any portion hereof may not be reprinted, sold or redistributed without our prior written consent. Copyright 215 Al Masah Capital Management Limited 7