TASI 7,087.82 Volume Value Trades 0.35% 226.2mn SAR5,287.9mn 114,209 Research Department research@alrajhi-capital.com Tel: +966 1 2119319/ Fax: +966 1 2119422 Market Commentary Global Markets: Week ahead The US market finished last week with minor gains as investors remained cautious amid upcoming fourth quarter earnings reports. Next week many notable firms including Dell, Wal-Mart Stores and American International Group (AIG) will come out with their latest results. Further, data from the US housing sector such housing starts and building permits along with inflation will provide directions to the market next week. The US market will remain closed on Monday for Presidents' Day. In the Euro zone, investors will continue to focus on several economic indicators that are set to release in next week. The first batch of confidence indicators will provide a first macro picture for the early part of this month. Moreover, on Friday the European Commission will publish its winter 2013 European Economic Forecast including updated GDP and deficit projections for countries. Tadawul consolidated above 7,050 TASI gained 0.4% to end the session at 7,087.82. Thirteen of fifteen sectors ended the session in green. Banking and Petrochemical sectors are major gainers rising 0.2% and 0.4% respectively. Trading turnover fell by 3.6% from Wednesday to 5.3bn on Saturday. Market breadth was positive as 90 stocks gained while 35 stocks ended its session in red. Market heavyweights Al Rajhi and SABIC gained 0.4% and 0.5% respectively.. Trading favorite Alinma gained 0.4% whereas Dar Al Arkan remained unchanged. Northern Cement gained 2.1% with high volumes on Saturday after witnessing selling pressure for consecutive six sessions. Outlook We expect TASI to open on a positive note. Technically, the index is looking constructive with immediate resistance at 7,120.0. TASI Intra-day Movement 7,070 7,060 7,050 7,040 11:00 12:00 13:00 14:00 15:00 Source: Bloomberg Saudi Market Indices Index Close Change (%) MTD (%) YTD (%) Tadawul All Share Index 7,087.8 0.4 0.6 4.2 Banks & Financial Services 15,450.8 0.2 0.9 5.5 Petrochemical Industries 6,055.0 0.4 0.3 3.4 Cement 6,285.1 0.4 1.1 3.7 Retail 7,750.6 0.0 1.2 3.3 Energy & Utilities 4,975.1 0.4 1.1 3.9 Agriculture & Food Ind. 6,749.0 0.1 2.0 2.4 Telecom & IT 2,242.6 0.5-1.0 3.6 Insurance 1,246.0 1.1-1.5-8.5 Multi-Investment 3,845.4 1.4 3.0 4.0 Industrial Investment 6,500.2-0.1-0.5 2.9 Building & Construction 2,973.5 0.3-0.9 5.4 Real Estate Development 3,685.0 1.2 1.9 10.2 Transport 5,086.2 0.4 0.4 4.5 Media and Publishing 3,060.0-0.1-2.1 5.2 Hotel & Tourism 9,392.8 Source: Tadawul 1.4 7.5 29.5 GCC Indices Close 1D% WTD% MTD% YTD% Value Traded (USD mn) Exchange Mkt. Cap. (USD mn) P/E P/B Dividend Yield% Saudi Arabia 7,087.8 0.4 0.4 Qatar 8,792.8-0.4 0.4 Dubai 1,894.0-0.5 1.9 Abu Dhabi 2,935.0-0.7 0.9 Kuwait 6,397.6 0.2 1.7 Oman 5,898.3 0.2 0.8 Bahrain 1,091.3 0.7 0.3 0.6 4.2 1,410.0 388,422.3 0.8 5.2 123.1 130,970.8 0.3 16.7 79.8 55,813.1 1.8 11.6 77.6 87,237.5 2.4 7.8 156.5 106,135.7 1.7 2.4 36.4 20,953.2 0.6 2.4 6.9 19,607.8 14.9 1.9 3.5 11.2 1.6 4.4 12.5 0.8 3.3 9.2 1.1 4.5 28.1 1.2 2.9 11.0 1.5 4.3 10.7 0.8 4.3 Global Indices Performance Close 1D% DJ Industrial 13,981.76 0.1 S&P 500 1,519.79-0.1 Nikkei 225 11,173.83-1.2 Hang Seng 23,444.56 0.1 FTSE 100 6,328.26 0.0 CAC 40 3,660.37-0.3 WTD% YTD% Asset/Currency Performance Close 1D% WTD% YTD% -0.1 6.7 Gold(US$) 1,610.10-1.5-3.4-3.9 0.1 6.6 Silver(US$) 29.80-2.0-5.1-1.8 0.2 7.5 Crude Oil (Brent)(US$) 120.39 0.0 0.9 6.7 1.0 3.5 Euro(US$) 1.34 0.0 0.0 1.3 1.0 7.3 USD Index 80.58 0.2 0.4 1.0 0.3 0.5 JPY(US$) 93.50 0.7 0.9 7.8
Tadawul Market Overview Sector Turnover Sector Volume 61.2 38.6 161.7 2.0 0.7 2.2 431.6 20.9 95.3 109.2 911.9 232.4 849.5 888.1 76.3 23.4 39.1 890.6 144.7 226.7 214.3 32.2 4.4 5.8 5.6 21.6 10.8 2.3 7.0 4.2 Banks & Financial Services Petrochemical Industries Cement Retail Energy & Utilities Agriculture & Food Industries Telecommunication & Information Technology Insurance Multi-Investment Industrial Investment Building & Construction Real Estate Development Transport Media and Publishing Hotel & Tourism Top Gainers Company Volume Leaders Change % Volume (mn) Company Change % Volume (mn) Nama Chemicals 14.2 5.6 9.5 Northern Cement 21.7 2.1 34.1 ACIG 70.0 4.9 2.1 Dar Al Arkan 8.6 0.0 32.1 Arab Cement 51.0 4.1 0.8 Emaar E.C 10.1 0.5 25.7 ALLIANZ SF 54.8 3.8 1.5 Alinma 13.7 0.4 15.6 AMANA Insurance 46.8 3.5 1.7 Jabal Omar 23.3 2.6 11.0 Source: Tadawul Top Losers Company Value Leaders Change % Volume (mn) Company Change % Value (mn) Saudi Export 91.8-3.4 0.5 Northern Cement 21.7 2.1 735.3 BJAZ 27.1-3.2 1.7 SABIC 94.0 0.5 553.9 SPPC 35.7-1.7 0.1 Dar Al Arkan 8.6 0.0 277.7 Saudi Investment 19.6-1.3 0.1 Emaar E.C 10.1 0.5 259.4 Catering 86.0-1.2 0.1 Jabal Omar 23.3 2.6 256.6 Source: Tadawul 52 Week New High / Low Stocks Consistently Gaining / Losing Over Last 3Sessions Company New High New Low Company ACIG 70.0 70.0 Kingdom 21.7 22.5 Current Price 3 Days Change % 3 Days Avg. Volume (mn) Allied Cooperative Insurance 70.0 12.9 1.7 Jabal Omar Development Co. 23.3 8.6 5.1 Jabal Omar 23.3 24.2 Arabian Cement 51.0 6.3 0.4 ALTAYYAR 88.0 91.8 Food Products Company 30.3-5.3 4.1 Source: Data pertaining to all the tables in this page are taken from Tadawul Stock Exchange, Official Website ` 2
Tadawul Technical Watch TASI gained on Saturday, as the index managed to move above its near-term resistance of 7,075. The RSI is holding strong and pointing upward, while MACD has made a positive crossover with the signal line, indicating further strength in price action. We expect TASI to continue its bullish momentum, if it remained above its horizontal support of 7,075. Pivot Table Symbol TASI 7,105.25 7,096.54 7,079.13 7,070.42 7,053.01 Tadawul All Shares Index Stocks Closest to Resistance Company R1 R2 PP Company Stocks Closest to Support S1 S2 PP United Electronics Co 112.00 112.08 112.17 111.92 Arab National Bank 27.80 27.73 27.67 27.87 SAFCO 156.25 156.50 156.75 156.25 Saudi Cement 97.25 97.42 97.58 97.08 Riyad Bank 23.30 23.35 23.40 23.30 National Gas & Industrialization Co 19.15 19.10 19.05 19.15 National Co for Glass Manufacturing/The 24.90 24.83 24.77 24.97 Rabigh Refining & Petrochemicals Co 17.50 17.45 17.40 17.50 Samba Financial Group 45.50 45.60 45.70 45.40 Al Jouf Cement Co 16.45 16.40 16.35 16.45 Jazan Development Co 14.95 14.98 15.02 14.92 Saudi Arabian Amiantit Co 15.35 15.30 15.25 15.40 Saudi Chemical Co 41.90 42.00 42.10 41.90 Etihad Etisalat Co 74.50 74.25 74.00 74.75 Saudi Electricity Co 13.90 13.93 13.97 13.87 Saudi Paper Manufacturing Co 29.70 29.60 29.50 29.70 Alinma Bank 13.65 13.68 13.72 13.62 Saudi Investment Bank 19.60 19.53 19.47 19.67 Source: Tadawul ` 3
Tadawul Technical Watch As expected, SABIC continue to trade between its two trend line. The stock gained on Saturday but failed to decisively breach its sloping resistance trend line. The stock has formed a doji candle stick pattern indicating further side-ways movement in the stock. The RSI is trending higher, while MACD line is indicating consolidation in the stock. We expect SABIC to gain, if it able to decisively breach its slopping resistance trend line of SAR94.0. SABIC 95.33 94.67 94.08 93.42 92.83 Saudi Basic Industries Corp. STC gained, as the stock remained above its horizontal support level of SAR40.0. Moreover, the stock has also breached its 12-day moving average (SAR 40.60), indicating further up movement in price action. The RSI is in rising mode, while MACD line has made a positive crossover with the signal line, supporting our bullish stance. We expect STC to gain further and test its immediate horizontal resistance of 42.10, if it remains above its 12-day moving average. STC 41.40 41.10 40.60 40.30 39.80 Saudi Telecom Co. ` 4
Tadawul Technical Watch In line with our expectation, Al Rajhi continued with its side-ways movement. However, the stock gained marginally on Saturday but failed to breach its slopping resistance trend line of SAR68.15. Moreover, 12 day and 21-day moving averages also acting as resistance for the stock. Both the indicators are in consolidation mode, thus indicating further side-ways movement in the stock. We expect Al Rajhi to continue with its sideways movement if it remains below its slopping resistance trend line. Al Rajhi 68.50 68.25 68.00 67.75 67.50 Al Rajhi Bank Kayan remained unchanged on Saturday, as the stock failed to breach its immediate resistance of 12- day moving average SAR11.77. The stock has also formed a doji candle stick pattern indicating further side-ways movement in the stock. The RSI is in flattish mode, while the MACD line is continuing with its sideways movement. We expect Kayan to consolidate further, if it remains below its resistance of 12-day moving average (SAR 11.77). KAYAN 11.83 11.77 11.68 11.62 11.53 Saudi Kayan Petrochemical Co. ` 5
Tadawul Technical Watch As expected, MA ADEN declined, as the stock remained below its 21- moving average (SAR34.17). The RSI is making lower tops, while MACD line is consolidating with signal line. We expect MA ADEN to decline and test its support of rising trend line at SAR33.35, if it remains below its 21-day moving average. MA ADEN 34.37 34.13 33.97 33.73 33.57 Saudi Arabian Mining Co. Major GCC Companies EMAAR declined on Thursday, as the stock remained below its horizontal resistance of AED5.12. However, the decline was limited as the stock respected its horizontal support at AED4.92. The RSI is stalling above its overbought zone, while MACD line is in consolidation mode. We expect EMMAR to consolidate further, if it manages to remain above its horizontal support of AED4.92. EMAAR Dubai Financial Market 5.15 5.09 5.02 4.96 4.89 Emaar Properties ` 6
GCC Technical Watch Arabtec remained unchanged on Thursday, as the stock managed to remain above its support of 12-day moving average (AED2.92). The RSI is consolidating below its over-bought zone, while MACD line is in flattish mode. We expect Arabtec to continue with its sideways movement, if it continues to respect its support of 12-day moving average. ARTC 3.03 3.00 2.97 2.94 2.91 Arabtec Holding Co. Dana Gas gained, as the stock remained above its horizontal support of AED0.50. However, the gains were limited, as the stock witnessed significant selling pressure from its resistance of AED0.54, that push the stock near its day s open price. The RSI is making higher tops and still below its over-bought zone, while MACD line is about to make positive crossover. We expect Dana Gas to consolidate if it remains below its resistance of AED0.54. The breach of the resistance on closing basis would be constructive for its near-term future. DANA 0.53 0.52 0.51 0.50 0.49 Dana Gas ` 7
GCC Technical Watch As expected, Industries Qatar witnessed profit booking on Thursday, after touching ceiling of its trend line resistance of Wednesday. The decline supported by rising volume, indicating further selling pressure in the stock. However, the decline was limited as the stock respected its immediate support of 21-day moving average (QR167.82). The RSI is declining and breached its over-bought zone, while MACD has made negative crossover, we expect Industries Qatar to decline further, if it moves below its support of 21-day moving average. IQCD 178.27 175.63 173.37 170.73 168.47 Industries Qatar Kuwait Finance remained unchanged on Thursday, as the stock failed to breach its immediate resistance if 12- day moving average (KD820.73) and declined. However, the stock witnessed buying interest from lowest point of day to end its session near its day s open price. The RSI is in consolidation mode, while MACD is consolidating in negative territory. We expect Kuwait finance to consolidate further with negative bias, if it remains below its resistance of 12-day moving average. KFIN 823.33 816.67 813.33 806.67 803.33 Kuwait Finance House ` 8
Definition - Technical Indicators Candlestick Patterns, Doji Doji is a form of candlestick pattern. It normally suggests major up and down movements. Trading above the Doji is positive for the market. Trading below the Doji value indicates bearish momentum. Hammer A small body (white or black) near the high with a long lower shadow with little or no upper shadow. This indicates a bullish pattern during a downtrend. Inverse-black-hammer: A bottom reversal signal with confirmation the next trading day. Moving Average, SMA (Simple Moving Average) Normally we use the 10, 20, 50 and 125 day SMA to identify the trend. A cross-over of the short-term moving average with the long-term moving average is positive for the market. The reverse is the case on the negative side. DEMA - Double-smoothed Exponential Moving Average We use the 10, 20 and 40 DEMA to identify a trend. A cross-over of the 10 and 20 DEMA gives a positive indication. A cross-over of the 20 and 10 DEMA gives a negative indication. As long as a stock or index trades above the 40 DEMA, this gives a positive indication for the stock or index. Trading below the 40 DEMA may create downside for a short time. MACD - Moving Average Convergence and Divergence The MACD has its own line period and another signal line; the dotted line indicates the signal line. When the MACD crosses the signal line from below and trades above it, it gives a positive indication. The reverse is the situation for a bearish trend. RSI - Relative Strength Index When the RSI remains below 30, it indicates that a market or stock is in oversold territory. When the RSI is above 70, it indicates that the market/stock is in an overbought level. Price ROC When the Price ROC is above zero it gives positive signals for an index or stock. When the price ROC is below zero, it gives a negative signal for the index or stock. Stochastic Oscillators When Stochastic Oscillators are below zero, the stock is in an oversold zone and some bounce back is expected. When Stochastic Oscillators are above zero, the stock is in an overbought zone and some correction is expected. Williams %R When Williams %R is above zero, the stock is in an overbought zone and some correction is expected. When Williams %R is below zero, the stock is in an oversold zone and some bounce back is expected. CCI (Commodity Channel Index) While the CCI was originally designed for commodities, the indicator also works very well with stocks and mutual funds. There are two methods of interpreting the CCI: 1. Looking for divergences: A popular method of analyzing the CCI is to look for divergences in which the underlying security is making new highs while the CCI is failing to surpass its previous highs. This classic divergence is usually followed by a correction in the security's price. 2. As an overbought/oversold indicator: The CCI usually oscillates between +/-100. Readings outside these ranges imply an overbought/oversold condition. Fibonacci Retracements Fibonacci Retracements are based on a trend line that we draw between a significant trough and peak. If the trend line is rising, the retracement lines will project downward; if the trend line is falling, the retracement lines will project upward. The number of Fibonacci Retracement levels appearing on the chart depends on the range of the y-axis. If we want to see all nine retracement levels, we may need to manually adjust the minimum and maximum values of the y-axis. Major Fibonacci Levels are 23.6%, 38.2%, 50%, 61.8% and 100%. Whipsaw A whipsaw is a situation in which a share price heads in one direction, but then is followed quickly by a movement in the opposite direction. The origin of the term is the push and pull action used by lumberjacks to cut wood with a type of saw of the same name. Gravestone Doji In a Japanese Candle Stick chart, this is a Doji candle where prices rallied but came back and closed at the level they started; the open and close are equal. ` 9
Inside Bar An inside bar is a bar, which is completely within the range of the preceding bar, i.e. it has a higher low and lower high than the bar immediately before it. An inside bar indicates a time of indecision or consolidation. On a smaller time frame, it will look like a triangle. Inside bars often occur at tops and bottoms, in continuation flags, and at key decision points like major support/resistance levels and consolidation breakouts. Big Bar A big bar is a bar, which is bigger than the preceding bar, i.e. it has a lower low and higher high than the bar immediately before it. Normally, after, forming a big bar, for a coming few sessions, the stock may move in the range of the high and low of the big bar. Breaking out or breaking down will give a fresh bullish or bearish pattern. Higher High This implies that today s intra-day high is higher than the intra-day high(s) of the previous session(s). Lower High This implies that today s intra-day high is lower than the intra-day high(s) of the previous session(s). Higher Low This implies that today s intra-day low is higher than the intra-day low(s) of the previous session(s). Lower Low This implies that today s intra-day low is lower than the intra-day low(s) of the previous session(s). Triangle This is a technical analysis pattern created by drawing trend lines along a price range that gets narrower over time because of lower tops and higher bottoms. Variations of a triangle include ascending and descending triangles. Technical analysts see a breakout of this triangular pattern as either bullish (on a breakout above the upper line) or bearish (on a breakout below the lower line). Standard Error Channel Parallel lines drawn higher and lower from the Linear Regression Trend-line form Standard Error Channels. The distance at which they are traced is a certain number of standard errors over or above the linear regression trend-line. The characteristic of the price fluctuations is its movement from one extreme to another and it depends on the traders' common opinion. Prices trend up in the optimistic market whether a pessimistic one causes prices reduction. The prices are drawn to a certain equilibrium point existing for each issue. The location of such point can be found out by using the Linear Regression analysis whether Standard Error Channel analysis presents the data about the cyclic direction of the prices as well as the forecasts for possible trend changes. Long Headed Doji Pattern This is a bullish signal, particularly when around price support levels. Double Tops / Double Bottoms A double top is simply two peaks. After the second peak is formed a breakout through the base is a signal of a possible reversal of the trend in prices. In the case of a double bottom, two troughs form and an expectation follow for the possibility of a trend reversal if the market price rises through the base. Waiting for confirmation is important for trading double tops or double bottoms. ` 10
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 Research Department Tel : +966 1 2119319 research@alrajhi-capital.com Al Rajhi Capital Research Department Head Office, King Fahad Road P.O. Box 5561, Riyadh 11432 Kingdom of Saudi Arabia Email: research@alrajhi-capital.com Al Rajhi Capital is licensed by the Saudi Arabian Capital Market Authority, License No. 07068/37. ` 11