Weekly Investment Report

Transcription

1 Economic & Market News Reuters: China's total trade fell in December but far less than expected, with exports outperforming many of its regional peers after the country let the Yuan depreciate sharply, highlighting fears of a currency war among Asia's trade-reliant economies. The trade data support our view that, despite turmoil in Chinese financial markets, there has not been a major deterioration in its economy in recent months. Exports from the world's largest trading nation fell 1.4% from a year earlier, data from the General Administration of Customs showed on Wednesday, much less than a Reuters poll forecast for an 8% drop and moderating from November's 6.8% decline. December imports fell 7.6%, receding for the 14th straight month but not as sharply as feared, possibly due to factories stocking up on crude oil, iron ore and other materials as global resource and commodity prices continued to fall. Indeed, China's crude oil imports hit a record high, while copper imports were the second highest on record. Economists had forecast an 11.5% import slide, after an 8.7% drop in November. The combination produced a USD 6.1 bn trade surplus for December, compared with economists' expectations of USD 53. bn and November's USD 54.1 bn. Reuters: Gulf Arab states are putting the finishing touches on draft laws on value-added taxes (VAT) of up to 5% that could be imposed from 218 to boost revenues hit by falling oil prices. The tax, drawn up in coordination with the six-nation Gulf Cooperation Council, can be introduced as soon as two GCC members are ready to implement it. The planned tax on consumer goods and services will be the first such levy in the six oil-producing GCC states that have traditionally been taxfree havens that attracted a large expatriate workforce. But with a sustained slide in oil prices by about 6% since June 214, they see no alternative to tax reform. The IMF expects the six Gulf states to post average fiscal deficits of around 13% in 216 for an estimated USD 275 billion shortfall. Introducing VAT across the Gulf could raise up to 2% of GDP in revenue. The UAE expects up to AED 12 bn (USD 3.26 bn) in revenues from a 5% VAT in the first year of its implementation. Gulf states will not charge VAT on some key sectors such as healthcare, education and social services or on 94 food items, there was still no agreement on whether to include financial services under VAT. There will be no exceptions, all consumers have to pay VAT once it comes into effect and initially there will be a uniform rate for all goods. Al Masah Capital: What started off as negative sentiment and uncertainty is starting to turn into panic and irrational pessimism. Markets are n ow appearing to price in a worst case scenario which seems slightly premature given that there is no single known full blown crisis underway. The slow burning decline of Oil and China is compounding the fear as it gives the impression that there is no end in sight. Comparisons to 28 also seem to be panic driven given that only a few weeks ago the US economy was strong enough for the FED to start raising rates while most of the developed world is considering the collapse in oil as a hidden stimulus. However, sentiment tends to overpower any other rationale and right now the markets are caught in a deep sentiment driven down cycle. Global markets are following each other down to the so called bottom and fundamentals and technicals are not relevant apparently. Regional markets are feeling the impact of oil and China just as strongly; in addition local markets are heavily retail driven meaning we have a further phenomenon to deal with: margin calls. Due to the severity of the current selloff, it will take time to come out of this mess; we may have short term bounces with significant short term profits available but for the time being, investors may want to step back and wait for the madness to end. However, people with significant gunpowder who have been waiting on the sidelines patiently since last year may want to start dipping their toes. Indexes Last WTD (%) MTD (%) YTD (%) Dubai (DFMGI) 2, % -1.65% -1.65% Abu Dhabi (ADSMI) 3, % -8.18% -8.18% Saudi (SASEIDX) 5, % % % Kuwait (KWSE) 5, % -6.22% -6.22% Egypt (EGX3) 5, % % % Qatar (DSM) 9, % % % Bahrain (BHSEIDX) 1, % -1.23% -1.23% Oman (MSM3) 5, % -5.43% -5.43% TR GCC (Reuters) % -1.6% -1.6% DJ MENA % % % Indexes Last WTD (%) MTD (%) YTD (%) DJI 15, % -8.25% -8.25% S&P 5 1, % -8.% -8.% NASDAQ 4, % -9.84% -9.84% STOXX Europe % -9.83% -9.83% FTSE 1 5, % -7.2% -7.2% DAX 9, % % % Commodities & FX Last WTD (%) MTD (%) YTD (%) Oil (Brent) % % % Natural Gas % % % Gold % -8.1% -8.1% Silver % -11.1% -11.1% EURUSD % -4.15%.46% GBPUSD % -7.74% -3.27% USDJPY % -1.53% -2.86% USDCHF 1..2% 5.38%.2% AUDUSD % -6.25% -5.59% USDCAD % 13.5% 5.7% LIBOR US Dollar WoW (%) Euro WoW (%) 1 Month % % 2 Month % % 3 Month % % 6 Month % % 12 Month % % CAC 4 4, % -9.21% -9.21% Nikkei , % -9.91% -9.91% SENSEX 24, % -6.37% -6.37% Shanghai Composite 2, % -18.3% -18.3% Hang Seng 19, % -1.92% -1.92% 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 Economic & Market News (continued) Reuters: Saudi Arabia's market regulator had approved rules governing the listing of real estate investment trusts (REITs), funds which could open the door to greater foreign investment in the kingdom's building sector. The Capital Market Authority (CMA) said it would only accept property appraisals by members of the Saudi Authority for Accredited Valuers (Taqeem), which is launching a licensing system for real estate valuation in the kingdom. The trusts are securities which trade on stock markets but invest directly in properties and distribute profits as dividends. They are common investment tools in many markets, but are new to the Middle East, with Emirates REIT becoming the region's first in April 214. Eskan Bank also announced plans to list a REIT on Bahrain's bourse in July. The approval by the market regulator, announced on state news agency SPA, comes after sources told Reuters in May that it was studying plans to introduce listing rules for REITs. REITs would offer tax benefits, especially for foreign investors who currently have to pay a 2% tax on all profits generated in the kingdom, as well as a 5% withholding tax when repatriating dividends. Reuters: The number of Americans filing for unemployment benefits unexpectedly rose last week, but remained at levels associated with a healthy labor market. Initial claims for state unemployment benefits increased 7, to a seasonally adjusted 284, for the week ended January 9th, 216. Still, it was the 45th consecutive week that claims remained below the 3, mark, which is associated with strong labor market conditions. That is the longest such stretch since the early 197s. Economists had forecast claims slipping to 275, last week. The increase likely reflects volatility as the data is difficult to adjust during holidays. Claims also tend to increase at the start of each quarter. The four-week moving average of claims, considered a better measure of labor market trends as it strips out week-to-week volatility, rose 3, to 278,75 last week. U.S. financial markets were little moved by the data. The labor market has largely shrugged off weakness in the economy, with nonfarm payrolls surging in December. Zawya: S&P expects negative earnings growth for banks in the UAE in 216 and a lackluster performance in 217, in the report published, "UAE Banks: Earnings To Decline in 216 As Operating Conditions Weaken. Investors are comparing today's tougher conditions for banks in the UAE to those during the global financial crisis starting in 29. However, S&P's believes that this time is different. It's true that during the past financial crisis, oil prices dropped as they have recently. Then, a steep decline in prices for real estate and the liquidity squeeze revealed excess leverage and weak funding structures for certain government-related entities (GREs) as well as a lack of proper underwriting practices at some UAE banks. After an initial shock to banks that led to a visible deterioration in performance in 29 and 21, liquidity began to flow back into the financial system in 21 on the back of stronger oil prices. The credit cycle turned as early as 212, and declining credit losses made way for a recovery in bank earnings. 4 US Government Bonds - Yield to Maturity (%) M 3M 6M 12M 2Y 5Y 1Y 3Y Last Week Current Week 14 Global Equity Indexes - Rebased 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/ BBB 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 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) MARKA PJSC % 4.17% 625 AJMAN BANK PJSC % 6.28% 2,31 NATIONAL CEMENT CO PSC %.57% 1,256 SHUAA CAPITAL PSC % -7.64% 399 EMAAR PROPERTIES PJSC % % 32,793 OMAN INSURANCE CO PSC % -9.72% 91 ARAB INSURANCE GROUP BSC % -9.5% 398 EMAAR MALLS GROUP PJSC % % 31,16 TAKAFUL EMARAT INSURANCE PJSC % % 21 ABU DHABI NATIONAL ENERGY CO % -2.13% 2,791 UNION CEMENT CO PSC % 5.4% 837 ABU DHABI NATIONAL FOR BUILDING.42 5.% -6.67% 126 ABU DHABI NATIONAL INSURANCE CO % 4.17% 1,125 FUJAIRAH CEMENT INDUSTRIES CO %.% 445 ARKAN BUILDING MATERIALS CO PJSC % % 1,278 INTL FISH FARMING HOLDING CO PJSC % -2.86% 468 ABU DHABI ISLAMIC BANK PJSC % % 1,55 INVEST BANK PSC % -21.% 2,59 UNITED ARAB BANK PJSC % -1.4% 6,656 (SAR mln) (SAR mln) ADVANCED PETROCHEMICAL CO SJSC % -7.96% 5,687 NATIONAL AGRICULTURE DEVELOP % % 1,45 SAUDI ARABIA FERTILIZERS CO SJSC % % 3,395 YANBU CEMENT CO SJSC % -8.28% 6,28 NATIONAL PETROCHEMICAL CO SJSC % % 6,619 TABUK CEMENT CO SJSC %.% 1,34 SAUDI INDUSTRIAL DEVELOPMENT CO % % 364 ASH SHARQIYAH DEVELOPMENT CO % % 266 SAUDI RESEARCH & MARKETING GRP % % 3,326 AL SAGR COOP INSURANCE CO SJSC % -22.4% 61 (fils) (KWD mln) (fils) (KWD mln) CONTRACTING & MARINE SERVICES % 7.55% 26 AMAR FINANCE AND LEASING CO KSC % 9.9% 12 KUWAIT FINANCE AND INVESTMENT % 2.7% 12 KUWAIT CEMENT CO KSC %.% 29 REAL ESTATE ASSET MANAGEMENT % 6.6% 15 METAL AND RECYCLING CO KSCP % % 4 REAL ESTATE TRADE CENTERS CO KSCC % -2.13% 3 NAFAIS HOLDING CO KSCC % -38.4% 48 MUNSHAAT REAL ESTATE PROJECTS % % 2 SOKOUK HOLDING CO KSCP % -26.6% 2 (EGP mln) (EGP mln) MISR OILS AND SOAP CO SAE % -1.34% 66 CAIRO FOR EDUCATIONAL AFFAIRS % 3.21% 64 GOLDEN COAST EL SOKHNA COMPANY % 7.1% 69 EL WADI CO FOR TOURISTIC INVEST % 11.16% 183 GULF ARAB INVESTMENT CO SAE.26 4.%.% 9 EGYPTIAN CHEMICAL INDUSTRIES SAE % -1.75% 1,8 EZZ STEEL CO SAE % -25.6% 3,64 GENERAL CO FOR LAND RECLAMATI % % 85 SUEZ CANAL BANK SAE % -1.24% 666 ORIENTAL WEAVERS CARPET CO SAE % % 2,799 (QAR mln) (QAR mln) DOHA INSURANCE CO QSC %.% 1,5 QATAR ISLAMIC INSURANCE CO QSC % % 96 AHLI BANK QSC %.43% 8,48 MEDICARE GROUP QSC % % 2,528 ISLAMIC HOLDING GROUP QSC % % 361 QATARI GERMAN CO FOR MEDICAL % % 127 AAMAL CO QSC % % 7,374 DLALA BROKERAGE AND INVESTMENT % % 432 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 53, % -12.4% % 2 EMIRATES TELECOM GROUP CO PJSC AE 38, %.6% % 3 SAUDI TELECOM CO SJSC SA 32, % -1.3% % 4 QATAR NATIONAL BANK SAQ QA 29, % -11.1% % 5 NATIONAL COMMERCIAL BANK SJSC SA 21, % -19.8% % 6 AL RAJHI BANKING AND INVESTMENT CORP SA 21, % -6.5% % 7 INDUSTRIES QATAR QSC QA 16, % -11.% % 8 SAUDI ELECTRICITY CO SJSC SA 14, % -14.9% % 9 DP WORLD LTD AE 14, % -12.1% % 1 FIRST GULF BANK PJSC AE 13, % -13.4% % 11 NATIONAL BANK OF KUWAIT SAK KW 12, % -7.5% % 12 JABAL OMAR DEVELOPMENT CO SJSC SA 11, % -18.4% % 13 KINGDOM HOLDING CO SA 11, % -28.3% % 14 ALMARAI CO SJSC SA 1, % -13.1% % 15 NATIONAL BANK OF ABU DHABI PJSC AE 1, % -8.3% % 16 EZDAN HOLDING GROUP QSC QA 1, % -1.7% % 17 EMIRATES NBD BANK PJSC AE 1, % -8.1% % 18 SAMBA FINANCIAL GROUP SJSC SA 1, % -17.3% % 19 RIYAD BANK SJSC SA 9, % -6.1% % 2 SAUDI ARABIAN MINING CO SJSC SA 9, % -1.8% % 21 EMAAR PROPERTIES PJSC AE 8, % -19.5% % 22 SAUDI BRITISH BANK SJSC SA 8, % -11.1% % 23 EMAAR MALLS GROUP PJSC AE 8, % -13.4% % 24 ABU DHABI COMMERCIAL BANK PJSC AE 8, % -15.9% % 25 SAUDI ARABIA FERTILIZERS CO SJSC SA 8, % -11.8% % 26 BANQUE SAUDI FRANSI SJSC SA 7, % -14.3% % 27 KUWAIT FINANCE HOUSE KSCP KW 7, % -12.% % 28 MASRAF AL RAYAN QSC QA 6, % -13.% % 29 EMIRATES INTEGRATED TELECOM CO PJSC AE 6, % -.8% % 3 OOREDOO QSC QA 6, % -5.6% % 31 ORASCOM CONSTRUCTION INDUSTRIES EG 6, % -6.3% % 32 QATAR ELECTRICITY AND WATER CO QSC QA 5, % -1.4% % 33 MESAIEED PETROCHEMICAL HOLDING CO QA 5, % -12.6% % 34 DUBAI ISLAMIC BANK PJSC AE 5, % -12.1% % 35 ARAB NATIONAL BANK SA 5, % -8.9% % 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 QATAR ISLAMIC BANK SAQ QA 5, % -19.% % 37 SAVOLA GROUP CO SJSC SA 5, % -22.9% % 38 ALINMA BANK SJSC SA 5, % -13.2% % 39 MOBILE TELECOMMUNICATIONS CO KSC KW 4, % -4.3% % 4 COMMERCIAL INTL BANK EGYPT SAE EG 4, % -17.2% % 41 COMMERCIAL BANK OF DUBAI PSC AE 4, % -4.8% % 42 ETIHAD ETISALAT CO SJSC SA 4, % -23.2% % 43 COMMERCIAL BANK QSC QA 4, % -23.% % 44 AHLI UNITED BANK BSC BA 4, % -5.% % 45 ALDAR PROPERTIES PJSC AE 4, % -13.8% % 46 MASHREQBANK PSC AE 3, %.% % 47 NATIONAL SHIPPING CO OF SAUDI ARABIA SA 3, % -19.7% % 48 QATAR INSURANCE CO SAQ QA 3, % -6.2% % 49 YANBU NATIONAL PETROCHEMICALS CO SA 3, % -2.% % 5 SAUDI HOLLANDI BANK SJSC SA 3, % -12.1% % Total MCap; Weighted Avg Div Yield 535, % 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