Saudi Arabian Economy Economic Research Research Department ARC Research Team Tel. +966 11 211 937, research@alrajhi-capital.com Saudi Arabia: Preliminary Govt. estimates for 219 budget point to expansionary spending The Ministry of Finance released its preliminary estimates for Govt revenues, expenditure and deficit. Government now expects 218 revenues to be higher by 13% and expenditure to be up 5% as compared to previous estimates. On a y-o-y basis revenue and expenditure are expected to be up 27% and 11% respectively leading to an expected fiscal deficit of SAR148bn (vs SAR195bn previously). We believe this deficit to be a conservative estimate given that oil prices are currently above our expectation of USD65/barrel (implied from Govt rev. estimates) and exports are likely to increase post recent OPEC decision. The increase in expenditure will imply significant spending in the remaining months pushing up growth and jobs. Even real GDP growth est. at 2.1% in 218 (up to 2.4% to 221) is conservative given change in input factors and changing economic structure leading to cautious growth estimates. As per monthly economic data released by the central bank, the Kingdom s economic indicators appear to be stable. Foreign reserves witnessed the fastest annual rise in almost four years (+4.5% y-o-y; +1.7% m-o-m) in August, which can be attributed to rising oil revenue and debt issuances by the government. Further, credit to the private sector advanced for the fifth straight month (+1.% y-o-y; +.7% m-o-m) in August, while bank claims to the public sector also increased (+21.7% y-o-y; +2.% m-o-m). POS transactions continued its upward march (+13.5% y-o-y) in August, driven by Restaurants & Hotels and Food & Beverages sectors; whereas ATM transactions declined (-6.7% y-o-y) in the same month. Remittances from Saudi nationals (-45.5% y-o-y) dropped for the second consecutive month in August, while those from non-saudi nationals also declined (-16.9% y-o-y). Meanwhile, the cost of living index recorded the same growth rate (+2.2% y- o-y) in August, as that in July; whereas on a monthly basis it witnessed a decline (-.2% m-o-m). In Q2 218, Kingdom registered a current account surplus of ~$19.bn, compared to $9bn in Q1 218, on the back of higher exports. Updated fiscal estimates: Preliminary estimates for 219 budget indicate an expansionary budget where the budgeted expenses have been increased for 218, 219 and 22 by 5%, 1% and 9% respectively over previous estimates. Hence we expect the coming months and therefore Q4 to see higher than usual expenditure, at around 32-35% of the budgeted expenses for the year. Government expects 218 revenues to be higher by 13% (over previous expectations) i.e., revenues to increase to 882bn from 783bn for this year. However we expect this is conservative as average oil prices have increased (that will push above USD65/barrel expected for the year) and exports are also bound to increase. Overall this will lower deficit to below SAR148bn estimated for 218. More longer term, the Govt expects deficit at 5% of GDP in 218 to decrease to 3.7% in 221. Figure 1 Revised fiscal estimates (SARbn) 217 218 219 22 Revised Rev. 696 882 978 15 Revised Exp. 926 13 116 1143 Revised Deficit -23-148 -128-138 Pre- Rev 696 783 843 99 Pre- Exp. 926 978 16 15 Pre- Deficit -23-195 -163-141 Change in estimates Rev 13% 16% 11% Exp 5% 1% 9% Deficit -24% -21% -2% Source: M inistry of Finance, Al Rajhi capital Please see penultimate page for additional important disclosures. Al Rajhi Capital (Al Rajhi) is a foreign broker-dealer unregistered in the USA. Al Rajhi research is prepared by research analysts who are not registered in the USA. Al Rajhi research is distributed in the USA pursuant to Rule 15a-6 of the Securities Exchange Act of 1934 solely by Rosenblatt Securities, an SEC registered and FINRA-member broker-dealer.
Saudi Arabia s Current Account Balance recorded a surplus in Q2 218 to stand at $19.bn, as against $9.bn in the previous quarter; driven by higher exports, which has recorded a steady rise over the past few quarters (Figure 3 & 4). Kingdom raised SAR 4.bn in September via domestic Sukuk issuance under the SARdenominated Sukuk program. The government sold SAR2.25bn of 5 year bonds, SAR 5mn of 7 year bonds and SAR 1.25bn of 1 year bonds. Further, it is reported that Saudi Arabia has started marketing US dollar-denominated Sukuk worth ~$2bn. This would be Kingdom s second international Sukuk sale after the $9bn issue last year. Ten major projects and investments worth more than SAR 685bn were unveiled on the 88 th Saudi National Day. These projects will provide a boost to the Saudi Arabian economy. SAMA foreign reserves rose at the fastest yearly pace in almost 4 years (+4.5% y-o-y) in August 218, as higher oil revenue and debt issuances has limited the government s need to use its foreign reserves to plug fiscal deficit. On a monthly basis, reserves increased by 1.7% in August (Figure 9 & 1). Meanwhile, government reserves with SAMA stood at SAR 637.2bn (including government current account) as of August, registering a monthly rise of 6.6%. Credit to the private sector increased 1.% y-o-y (+.7% m-o-m) in August, while bank claims on public sector rose 21.7% y-o-y (+2.% m-o-m) in the same month. Meanwhile, deposits dropped.6% y-o-y (+.3% m-o-m) in August (Figure 11 & 12). JPMorgan Emerging Markets Index has announced the listing of Saudi issues. Inclusion in the index will improve liquidity for the government s issuances and may lead to inflows of ~$11bn next year. Saudi issues will constitute 3.1% of the indices weight. Kingdom will offer electronic visa to foreign visitors for attending sporting events and concerts from December this year. Kingdom aims to achieve total tourism spending of $46bn in 22 ($27.9bn in 215). Banking sector profits rose 4.6% y-o-y to stand at SAR 4,147mn in August (+19.3% y-o-y in July). The cumulative banking sector profits for the year (till August 218) stood at SAR 32,965mn, recording a rise of 9.2% y-o-y (Figure 16). Money Supply (M3) remained broadly stable in August at SAR 1,795bn. Meanwhile, as per the weekly money supply data, published by SAMA, M3 may witness an improvement in September (Figure 13). Point-of-sale (POS) transactions advanced 13.5% y-o-y in August (+25.3% y-o-y in July), backed by Restaurants and Hotels (+38.% y-o-y), Food and Beverage (+18.6% y-o-y) and Clothing and Footwear (+4.7% y-o-y) segments. However, ATM transactions dropped by 6.7% y-o-y in August (+12.7% y-o-y in July) (Figure 6, 7 & 8). Remittances (Personal Transfers) by Saudi nationals dropped 45.5% y-o-y in August versus the fall of 32.5% y-o-y in July, while remittances by non-saudi nationals slipped 16.9% y-o-y in the same month (+7.9% y-o-y in July) (Figure 5). Crude oil prices (Brent November futures contract) climbed 5.% MTD in September, as the EIA lowered the US crude oil output forecasts for 218 and 219. Further, reports suggesting a major hurricane approaching the US east coast also aided oil prices. Meanwhile, crude oil production increased.2% m-o-m, to 1.4mbpd in August 218, versus the fall of.5% m-o-m in July (Figure 19 & 2). Cost of living index (base year 213) rose by 2.2% y-o-y in August, recording the same growth rate as that in July. The Food & Beverages sector witnessed a drop, whereas the Transport sector recorded a rise. On a monthly basis, the index dropped by.2% in August versus +.1% in July (Figure 17 & 18). Disclosures Please refer to the important disclosures at the back of this report. 2
Crude price outlook: The US Energy Information Administration (EIA) in its September 218 report estimated Brent crude oil prices to average US$73/barrel for 218 and US$74/barrel for 219. Figure 2 Key macro indicators Variable Sep-18 Aug-18 Jul-18 217 216 Inflation Rate (27=1) % - 2.2% 2.2% -.8% 2.1% Sep-18 Aug-18 Jul-18 217 216 Average Oil Price (Arab Light) (US$/Barrel) 77.2 73.4 74.2 52.5 41. Sep-18 Aug-18 Jul-18 217 216 Money Supply (M3) % - -.8%.2%.8% Total Banking Sector Claims - 4.6 4.7 3.8 9.1 Interbank Interest Rate (3 Month) % 2.71 2.68 2.68.88.936 Repo Rate % 2.75 2.5 2.5 2. 2. Reverse Repo Rate % 2.25 2 2. 1.5.75 General Share Price Index (1985=1) - 9.5 19.7.2 4.3 Q1 218* Q4 217* 217* 216 GDP Rate at Constant Prices (21=1) % - 1.2% -1.4% -.9% 1.7% Q1 218* Q4 217* 217* 216 Current Account to GDP Ratio (current prices) % - 5.1% 4.3% 2.2% -3.7% Total Imports (fob) to GDP Ratio (current prices)% - 16.4% 16.5% 17.4% 19.8% Non-oil Exports to GDP Ratio (current prices) % - 8.1% 8.% 7.4% 7.4% Source: SAMA, Bloomberg * Provisional. Arab Light and Interbank interest rate data is as on 27 th. Current account recorded a surplus in Q2 218 Balance of Payments As per the Q2 218 data released by SAMA, the current account balance recorded a surplus of US$19.bn versus US$9.bn in Q1 218. Current account surplus in Q2 218 was supported by higher exports, which has registered a steady rise for the past few quarters. Meanwhile, the imports remained broadly stable as compared to the previous quarter. Figure 3 Current Account Balance 5 USD bn 4 3 2 1-1 -2-3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 213 213 213 213 214 214 214 214 215 215 215 215 216 216 216 216 217 217 217 217 218 218 Current Account Balance Disclosures Please refer to the important disclosures at the back of this report. 3
Figure 4 Breakdown of Current Account Balance USD bn 12 1 8 6 4 2-2 -4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 213 213 213 213 214 214 214 214 215 215 215 215 216 216 216 216 217 217 217 217 218 218 Remittances Income Exports Imports Current Account Balance Remittances declined in August 218 Remittance Remittances (Personal Transfers) from Saudi nationals dropped 45.5% y-o-y (-32.5% y-o-y in July) to ~SAR 3.7bn in August 218, while remittances from non-saudi nationals slipped 16.9% y-o-y (+7.9% y-o-y in July) to stand at SAR 1.4bn. Figure 5 Remittances SAR mn 16 14 12 1 8 6 4 2 1 8 6 4 2-2 -4-6 Saudi Non-Saudi Saudi y-o-y change (RHS) Non Saudi y-o-y change (RHS) POS transactions increased in August Consumer spending indicators POS transactions rose for the 14 th consecutive month by 13.5% y-o-y in August 218 compared to the yearly rise of 25.3% in July, whereas the ATM cash withdrawals dropped by 6.7% y-o-y in August 218 (+12.7% y-o-y in July). POS transactions growth can be primarily attributed to the increase in Restaurants and Hotels (+38.% y-o-y), Food and Beverage (+18.8% y-o-y) and Clothing and Footwear (+4.7% y-o-y) segments. Disclosures Please refer to the important disclosures at the back of this report. 4
Figure 6 Point-of-sale transactions (POS) trend Figure 7 ATM cash withdrawals trend SAR bn 25. 4% SAR bn 8. 5% 2. 15. 3% 2% 7. 6. 5. 4% 3% 2% 1% 4. 1% 1. % 3. % 5. -1% 2. 1. -1% -2% - -2% - -3% POS YoY ATM Cash withdrawals YoY Figure 8 Points-of-sale transactions trend by sectors 1.% YoY change 8.% 6.% 4.% 2.%.% -2.% -4.% Transportation Rest. and Hotels Food & Beverages Cloth. and Footwear SAMA reserves registered a rise in August SAMA Foreign Exchange Reserves SAMA Foreign Exchange reserves increased at the fastest yearly pace in almost 4 years (+4.5% y-o-y) in August 218 to stand at SAR 1,911bn (US$ 59.4bn). Meanwhile, on a monthly basis, reserves rose by 1.7% in August (-1.% m-o-m in July). Meanwhile, investment in foreign securities dropped.8% m-o-m in August, same as that in July; whereas foreign currency and deposits abroad surged 6.2% m-o-m in August compared to the drop of 1.4% m-o-m in July. Disclosures Please refer to the important disclosures at the back of this report. 5
Figure 9 Reserves assets SAR bn 3, 2,5 2, 1,5 1, 5 2 15.% 1 5.% -5.% -1-15.% -2 Figure 1 Major components of foreign assets SAR bn 2, 1,8 1,6 1,4 1,2 1, 8 6 4 2 Reserves Assets YoY (RHS) Foreign Currency & Deposits Abroad Investment in Foreign Assets Private sector credit increased in August Credit and deposit growth Banking sector credit to the private sector climbed on an annual basis (+1.% y-o-y) for the fifth straight month in August 218 (+.7% m-o-m), compared to the rise of.7% y-o-y (+.2% m-o-m) in last month. Claims on the public sector rose 21.7% y-o-y (+2.% m-o-m) in August 218, as against the rise of 24.2% y-o-y (+.9% m-o-m) in July. However, deposits dropped.6% y-o-y in August (+.3% m-o-m), versus -1.5% y-o-y (-.6% m-o-m) in the previous month. Business and Individual deposits, which constitute ~72% of the total deposit base, increased.3% y-o-y (+.2% m-o-m), whereas Government Entities deposits slipped 11.% y-o-y (-.2% m-o-m). Figure 11 Credit and deposit growth Figure 12 Loans to Deposits YoY 2 15.% 86.% 84.% 1 82.% 5.% 8 78.% -5.% 76.% -1 74.% Deposits Credit Loan to Deposit Ratio M3 remained stable in August Money supply Broader money supply (M3) remained broadly unchanged in August, to stand at SAR 1,795bn, compared to the annual drop of.8% in July. M1 registered a rise of 3.2% y-o-y; whereas M2 declined 1.4% y-o-y. On a monthly basis, the M3 rose.4% in August (-.9% m- o-m in July). As per the weekly money supply data by SAMA, M3 may witness an improvement in September. Disclosures Please refer to the important disclosures at the back of this report. 6
Figure 13 Money supply growth (y-o-y) 25.% 2 15.% 1 5.% -5.% -1-15.% Figure 14 Deposits break-up SAR bn 1,2 1, 8 6 4 2 3% 25% 2% 15% 1% 5% % -5% -1% -15% M1 M2 M3 Time and Saving Deposits (LHS) Time and Saving Deposits (y-o-y) Demand Deposits (LHS) Demand Deposits (y-o-y) Banking sector profits continued to rise in August Banking Sector Banking sector profits rose by 4.6% y-o-y in August 218 (+19.3% y-o-y in July), to stand at SAR 4,147mn, while the cumulative profits for the year (till August 218) stood at SAR 32,965mn (+9.2% y-o-y). On a monthly basis, banking sector profits slipped 12.8% in August (+5.7% m-o-m in July). Figure 15 Non-performing loans (%) Figure 16 Net Profit for Banks 1.9 1.8 1.7 1.6 1.5 1.4 1.4 1.3 1.2 1.1 1.3 1.1 1.2 1.2 1.2 1.2 1.2 1.2 1.3 1.4 1.4 1.4 1.5 1.6 1.7 1.8 SAR mn 5, 4,5 4, 3,5 3, 2,5 2, 1,5 1. 1, 5 - Nonperforming loans to total gross loans. Q3 218 data not released yet. Cost of living index rose in August Inflation dynamics Cost of living index recorded a rise of 2.2% y-o-y in August 218, same as that in July 218. The Transport sector (constituting ~9.95% of the index) rose by 1.5% y-o-y (+1.4% y-o-y in July); whereas the Food & Beverage sector (accounting ~18.9% of the index) increased by 6.6% y-o-y (+6.7% y-o-y in July). On a monthly basis, the cost of living index declined by.2% in August, after rising for two months in a row. Disclosures Please refer to the important disclosures at the back of this report. 7
Figure 17 Inflation trend (y-o-y) Figure 18 Inflation drivers (y-o-y) 5.% 12.% 4.% 3.% 2.% 1.% 3.% 2.9% 2.8% 2.5% 2.3% 2.1% 2.2% 2.2% 1 8.% 6.% 4.% 2.% -1.% -.8% -.8% -1.2% -1.1% -2.% -1.7% -3.% -2.% -4.% -6.% General Index Food And Beverages Transport Furnishings, Household Housing, Water, Electricity, Gas Source: GAS, Al Rajhi Capital Source: GAS, Al Rajhi Capital Crude oil prices rose on a MTD basis in September Crude oil dynamics Crude oil prices (Brent November futures contract) gained 5.% MTD in, as the EIA lowered the US crude oil output forecasts for 218 and 219. Further, reports suggesting a major hurricane approaching the US east coast also aided oil prices. Meanwhile, that the OPEC ruled out any immediate increase in crude oil output, despite the US President s call to ramp up production. Crude oil production increased.2% on a monthly basis, to 1.4mbpd in August 218, versus the drop of.5% m-o-m in July. On an annual basis, the crude oil output rose 3.9% in August versus the rise of 3.4% in the previous month. Figure 19 Saudi crude oil production trend (mbpd) Figure 2 Crude oil prices trend (US$/bbl) 1.8 1.6 1.4 1.2 1. 9.8 9.6 9.4 9.2 9. 8.8 12.% 1 8.% 6.% 4.% 2.% -2.% -4.% -6.% -8.% 85 8 75 7 65 6 55 5 45 4 35 Source: Bloomberg, Al Rajhi Capital Saudi Crude oil production YoY growth Source: Bloomberg, Al Rajhi Capital Brent WTI Arab Light Saudi International bond yields with longer maturities fell in September Saudi international bond yields Saudi international bond yields with 3 year maturity dropped by 1bps MTD to 4.776% in, whereas bond yields with 5 and 1 year maturities rose by 6bps and 8.6bps, respectively to 3.483% and 4.75%. Disclosures Please refer to the important disclosures at the back of this report. 8
Figure 21 International Bond Yields 6.% 5.% 4.% 3.% 2.% 1.% 3 Yr 1 Yr 5 Yr Source: Bloomberg, Al Rajhi Capital GBP and EUR rose on a MTD basis in Sept against the USD Exchange Rates On the forex front, the British Pound and the Euro rose on a MTD basis in September against the US Dollar; whereas the Japanese Yen and the Chinese Yuan fell against the US Dollar. Meanwhile, the Canadian Dollar remained broadly unchanged on a MTD basis against the US Dollar. Figure 22 Monthly Change (%) against the US Dollar 1.5% 1.%.5% -.5% -1.% -1.5% -2.% -2.5% UK Europe Australia Canada China Japan Monthly Change (%) against USD Source: Bloomberg, Al Rajhi Capital Disclosures Please refer to the important disclosures at the back of this report. 9
IMPORTANT DISCLOSURES FOR U.S. PERSONS This research report was prepared by Al Rajhi Capital (Al Rajhi), a company authorized to engage in securities activities in Saudi Arabia. Al Rajhi is not a registered broker-dealer in the United States and, therefore, is not subject to U.S. rules regarding the preparation of research reports and the independence of research analysts. This research report is provided for distribution to major U.S. institutional investors in reliance on the exemption from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the Exchange Act ). Any U.S. recipient of this research report wishing to effect any transaction to buy or sell securities or related financial instruments based on the information provided in this research report should do so only through Rosenblatt Securities Inc, 4 Wall Street 59th Floor, New York NY 15, a registered broker dealer in the United States. Under no circumstances should any recipient of this research report effect any transaction to buy or sell securities or related financial instruments through Al Rajhi. Rosenblatt Securities Inc. accepts responsibility for the contents of this research report, subject to the terms set out below, to the extent that it is delivered to a U.S. person other than a major U.S. institutional investor. The analyst whose name appears in this research report is not registered or qualified as a research analyst with the Financial Industry Regulatory Authority ( FINRA ) and may not be an associated person of Rosenblatt Securities Inc. and, therefore, may not be subject to applicable restrictions under FINRA Rules on communications with a subject company, public appearances and trading securities held by a research analyst account. Ownership and Material Conflicts of Interest Rosenblatt Securities Inc. or its affiliates does not beneficially own, as determined in accordance with Section 13(d) of the Exchange Act, 1% or more of any of the equity securities mentioned in the report. Rosenblatt Securities Inc, its affiliates and/or their respective officers, directors or employees may have interests, or long or short positions, and may at any time make purchases or sales as a principal or agent of the securities referred to herein. Rosenblatt Securities Inc. is not aware of any material conflict of interest as of the date of this publication. Compensation and Investment Banking Activities Rosenblatt Securities Inc. or any affiliate has not managed or co-managed a public offering of securities for the subject company in the past 12 months, nor received compensation for investment banking services from the subject company in the past 12 months, neither does it or any affiliate expect to receive, or intends to seek compensation for investment banking services from the subject company in the next 3 months. Additional Disclosures This research report is for distribution only under such circumstances as may be permitted by applicable law. This research report has no regard to the specific investment objectives, financial situation or particular needs of any specific recipient, even if sent only to a single recipient. This research report is not guaranteed to be a complete statement or summary of any securities, markets, reports or developments referred to in this research report. Neither Al Rajhi nor any of its directors, officers, employees or agents shall have any liability, however arising, for any error, inaccuracy or incompleteness of fact or opinion in this research report or lack of care in this research report s preparation or publication, or any losses or damages which may arise from the use of this research report. Al Rajhi may rely on information barriers, such as Chinese Walls to control the flow of information within the areas, units, divisions, groups, or affiliates of Al Rajhi. Investing in any non-u.s. securities or related financial instruments (including ADRs) discussed in this research report may present certain risks. The securities of non-u.s. issuers may not be registered with, or be subject to the regulations of, the U.S. Securities and Exchange Commission. Information on such non-u.s. securities or related financial instruments may be limited. Foreign companies may not be subject to audit and reporting standards and regulatory requirements comparable to those in effect within the United States. The value of any investment or income from any securities or related financial instruments discussed in this research report denominated in a currency other than U.S. dollars is subject to exchange rate fluctuations that may have a positive or adverse effect on the value of or income from such securities or related financial instruments. Past performance is not necessarily a guide to future performance and no representation or warranty, express or implied, is made by Al Rajhi with respect to future performance. Income from investments may fluctuate. The price or value of the investments to which this research report relates, either directly or indirectly, may fall or rise against the interest of investors. Any recommendation or opinion contained in this research report may become outdated as a consequence of changes in the environment in which the issuer of the securities under analysis operates, in addition to changes in the estimates and forecasts, assumptions and valuation methodology used herein. No part of the content of this research report may be copied, forwarded or duplicated in any form or by any means without the prior consent of Al Rajhi and Al Rajhi accepts no liability whatsoever for the actions of third parties in this respect. 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. Disclosures Please refer to the important disclosures at the back of this report. 1
Disclaimer and additional disclosures for Economic Research 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 Mazen AlSudairi Head of Research Tel : +966 11 211 9449 Email: alsudairim@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. 37/768. Disclosures Please refer to the important disclosures at the back of this report. 11