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QNBFS Daily Market Report April 15, 2019

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The QE Index declined 0.2% to close at 10,235.8. Losses were led by the Insurance and Industrials indices, falling 0.9% and 0.8%, respectively.

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QNBFS Daily Market Report April 15, 2019

  1. 1. Page 1 of 8 QSE Intra-Day Movement Qatar Commentary The QE Index declined 0.2% to close at 10,235.8. Losses were led by the Insurance and Industrials indices, falling 0.9% and 0.8%, respectively. Top losers were Widam Food Company and Qatar National Cement Company, falling 2.5% and 2.4%, respectively. Among the top gainers, Al Khaleej Takaful Insurance Company gained 10.0%, while Qatar First Bank was up 4.5%. GCC Commentary Saudi Arabia: The TASI Index fell 0.4% to close at 9,055.3. Losses were led by the Pharma, Biotech & Life Science and Diversified Financials indices, falling 1.1% each. Allied Coop. Ins. declined 5.9%, while Al-Baha Invest. & Dev. was down 3.5%. Dubai: The DFM Index fell 0.1% to close at 2,787.6. The Real Estate & Const. index declined 1.5%, while the Services index fell 0.7%. Al Salam Sudan declined 8.4%, while Emaar Malls was down 4.0%. Abu Dhabi: The ADX General Index gained 2.4% to close at 5,174.0. The Banks index rose 3.7%, while the Energy index gained 3.4%. Ras Al Khaimah Cement Company rose 8.5%, while Dana Gas was up 6.5%. Kuwait: The Kuwait Main Market Index gained 0.7% to close at 5,046.3. The Consumer Goods index rose 1.4%, while the Insurance index gained 1.1%. Specialities Group Holding Co. rose 9.0%, while First Takaful Ins. Co. was up 7.9%. Oman: The MSM 30 Index gained 0.2% to close at 3,990.7. Gains were led by the Industrial and Services indices, rising 1.8% and 1.0%, respectively. Dhofar Cattle Feed rose 10.0%, while Voltamp Energy was up 9.3%. Bahrain: The BHB Index gained 0.5% to close at 1,445.0. The Commercial Banks index rose 0.8%, while the Industrial index gained 0.4%. Ithmaar Holding rose 7.1%, while BMMI was up 4.1%. QSE Top Gainers Close* 1D% Vol. ‘000 YTD% Al Khaleej Takaful Insurance Co. 16.45 10.0 198.0 91.5 Qatar First Bank 5.09 4.5 5,720.1 24.8 Alijarah Holding 8.68 3.6 438.7 (1.3) Ezdan Holding Group 11.37 3.2 1,009.4 (12.4) Dlala Brokerage & Inv. Holding Co. 10.70 2.2 123.0 7.0 QSE Top Volume Trades Close* 1D% Vol. ‘000 YTD% Qatar First Bank 5.09 4.5 5,720.1 24.8 Mazaya Qatar Real Estate Dev. 8.90 0.3 1,696.8 14.1 Doha Bank 21.41 0.0 1,619.7 (3.6) Ezdan Holding Group 11.37 3.2 1,009.4 (12.4) Investment Holding Group 5.35 0.4 960.5 9.4 Market Indicators 14 April 19 11 April 19 %Chg. Value Traded (QR mn) 245.3 257.8 (4.9) Exch. Market Cap. (QR mn) 574,730.6 574,844.3 (0.0) Volume (mn) 16.6 19.2 (13.6) Number of Transactions 4,666 6,464 (27.8) Companies Traded 41 45 (8.9) Market Breadth 22:19 30:14 – Market Indices Close 1D% WTD% YTD% TTM P/E Total Return 18,834.67 (0.2) (0.2) 3.8 14.2 All Share Index 3,132.33 0.1 0.1 1.7 14.7 Banks 3,871.60 0.2 0.2 1.1 13.6 Industrials 3,302.96 (0.8) (0.8) 2.7 15.1 Transportation 2,408.59 (0.3) (0.3) 16.9 13.3 Real Estate 2,000.95 1.8 1.8 (8.5) 16.5 Insurance 3,299.20 (0.9) (0.9) 9.7 19.9 Telecoms 936.77 (0.5) (0.5) (5.2) 19.1 Consumer 7,910.10 (0.1) (0.1) 17.1 15.4 Al Rayan Islamic Index 4,081.57 (0.3) (0.3) 5.1 13.6 GCC Top Gainers## Exchange Close# 1D% Vol. ‘000 YTD% First Abu Dhabi Bank Abu Dhabi 15.58 5.0 10,179.4 10.5 Comm. Bank of Kuwait Kuwait 0.70 4.2 625.5 39.8 Bank Sohar Oman 0.11 1.8 113.9 0.0 Advanced Petrochem. Co. Saudi Arabia 58.20 1.7 395.0 15.2 HSBC Bank Oman 0.12 1.7 24.0 0.8 GCC Top Losers## Exchange Close# 1D% Vol. ‘000 YTD% Ominvest Oman 0.31 (5.5) 964.4 (10.0) Emaar Malls Dubai 1.67 (4.0) 11,558.6 (6.7) Bank Dhofar Oman 0.14 (2.9) 13.8 (13.0) Bank Al Bilad Saudi Arabia 25.90 (2.4) 1,342.4 18.8 DAMAC Properties Dubai 1.28 (2.3) 2,914.4 (15.2) Source: Bloomberg (# in Local Currency) (## GCC Top gainers/losers derived from the S&P GCC Composite Large Mid Cap Index) QSE Top Losers Close* 1D% Vol. ‘000 YTD% Widam Food Company 59.85 (2.5) 63.5 (14.5) Qatar National Cement Company 70.90 (2.4) 17.3 19.2 The Commercial Bank 45.12 (1.9) 54.6 14.5 Medicare Group 63.50 (1.8) 10.0 0.6 Qatar Insurance Company 38.10 (1.3) 8.9 6.1 QSE Top Value Trades Close* 1D% Val. ‘000 YTD% QNB Group 180.40 0.2 38,186.1 (7.5) Doha Bank 21.41 0.0 34,661.2 (3.6) Qatar First Bank 5.09 4.5 28,767.6 24.8 Qatar Fuel Company 201.54 0.3 17,284.1 21.4 Mazaya Qatar Real Estate Dev. 8.90 0.3 15,063.8 14.1 Source: Bloomberg (* in QR) Regional Indices Close 1D% WTD% MTD% YTD% Exch. Val. Traded ($ mn) Exchange Mkt. Cap. ($ mn) P/E** P/B** Dividend Yield Qatar* 10,235.76 (0.2) (0.2) 1.3 (0.6) 67.03 157,878.5 14.2 1.5 4.3 Dubai 2,787.64 (0.1) (0.1) 5.8 10.2 49.67 98,910.1 10.0 1.0 4.9 Abu Dhabi 5,174.02 2.4 2.4 2.0 5.3 75.29 141,861.2 14.5 1.5 4.7 Saudi Arabia 9,055.34 (0.4) (0.4) 2.7 15.7 666.56 568,022.5 20.4 2.0 3.2 Kuwait 5,046.34 0.7 0.7 2.6 6.5 95.99 34,539.6 15.1 0.9 4.0 Oman 3,990.71 0.2 0.2 0.2 (7.7) 7.94 17,353.9 8.3 0.8 6.9 Bahrain 1,444.97 0.5 0.5 2.2 8.1 2.11 22,159.4 9.6 0.9 5.7 Source: Bloomberg, Qatar Stock Exchange, Tadawul, Muscat Securities Market and Dubai Financial Market (** TTM; * Value traded ($ mn) do not include special trades, if any) 10,200 10,220 10,240 10,260 10,280 9:30 10:00 10:30 11:00 11:30 12:00 12:30 13:00
  2. 2. Page 2 of 8 Qatar Market Commentary  The QE Index declined 0.2% to close at 10,235.8. The Insurance and Industrials indices led the losses. The index fell on the back of selling pressure from non-Qatari shareholders despite buying support from Qatari and GCC shareholders.  Widam Food Company and Qatar National Cement Company were the top losers, falling 2.5% and 2.4%, respectively. Among the top gainers, Al Khaleej Takaful Insurance Company gained 10.0%, while Qatar First Bank was up 4.5%.  Volume of shares traded on Sunday fell by 13.6% to 16.6mn from 19.2mn on Thursday. However, as compared to the 30-day moving average of 12.3mn, volume for the day was 35.1% higher. Qatar First Bank and Mazaya Qatar Real Estate Development were the most active stocks, contributing 34.4% and 10.2% to the total volume, respectively. Source: Qatar Stock Exchange (* as a % of traded value) Earnings Releases and Earnings Calendar Earnings Releases Company Market Currency Revenue (mn) 1Q2019 % Change YoY Operating Profit (mn) 1Q2019 % Change YoY Net Profit (mn) 1Q2019 % Change YoY Phoenix Power Oman OMR 18.1 13.1% 0.3 67.5% 4.9 N/A Oman Flour Mills Company Oman OMR 25.2 13.3% – – 2.5 -24.3% Al Suwadi Power Oman OMR 12.0 -1.4% – – -2.5 N/A Computer Stationery Ind.# Oman OMR 460.1 3.4% – – 43.0 429.1% Renaissance Services Oman OMR 70.3 36.2% 19.8 132.5% 7.8 793.7% Dhofar Tourism# Oman OMR 150.6 -84.3% – – 221.8 N/A Packaging Co. Ltd Oman OMR 2.6 5.8% – – 0.1 69.5% Gulf Hotels Oman OMR 2.7 2.8% – – 0.7 -15.3% Muscat City Desalination# Oman OMR 3,809.0 -3.6% – – 365.0 3.4% Oman Chromite# Oman OMR 630.2 60.6% – – 86.1 -39.9% Ubar Hotels and Resorts# Oman OMR 1,488.3 -2.5% 402.8 10.4% 303.7 14.0% Al Kamil Power# Oman OMR 1,909.0 -3.0% 523.0 4.0% 1,798.0 321.1% Oman Packaging Oman OMR 3.2 -2.6% – – 0.2 80.9% Al Fajar Al Alamia Oman OMR 16.3 4.3% – – 1.3 7.4% Gulf Mushroom Products Oman OMR 2.0 8.1% – – 0.2 48.8% Dhofar Int.Dev.and Inv. Hold. Oman OMR 8.3 -17.1% – – -2.9 N/A Al Hassan Engineering Oman OMR 8.6 57.1% – – 0.5 N/A Oman Ceramic Company # Oman OMR 639.5 31.6% – – -199.2 N/A Oman Chlorine Oman OMR 3.4 10.5% 0.7 46.0% 0.3 8.7% Raysut Cement Oman OMR 23.0 9.8% 0.7 -39.2% 0.2 -46.0% Majan Glass Oman OMR 2.8 69.5% – – 0.3 N/A Sweets of Oman Oman OMR 2.4 -11.4% – – 0.2 N/A Al Batinah Power Oman OMR 12.7 26.0% – – -2.4 N/A Sharqiyah Desalination Oman OMR 3.5 5.9% – – 0.8 220.5% United Finance# Oman OMR 2,286.0 -9.6% – – 261.0 -5.1% United Power# Oman OMR 1,046.0 -16.5% – – 30.0 -75.6% Al Anwar Holding# Oman OMR 1,030.0 -73.9% – – 534.0 -86.2% Al Ahlia Insurance Oman OMR 7.4 -7.5% – – 1.7 2.2% Al Jazeera Steel Products Co. Oman OMR 27.7 -10.5% – – 0.3 -79.8% National Finance Oman OMR 423.8 4.9% – – 2.1 -20.5% Salalah Mills# Oman OMR 14,762.4 9.7% – – 995.6 4.4% Shell Oman Marketing Oman OMR 120.6 -2.4% – – 1.8 -29.3% Al Madina Investment# Oman OMR 273.2 -46.4% – – -1.6 N/A Construction Materials Ind.# Oman OMR 853.7 -5.4% – – 58.1 46.7% Muscat Thread Mills# Oman OMR 953.4 9.9% – – 21.6 -45.8% Al Sharqia Investment Holding# Oman OMR 607.6 -7.5% – – 399.4 -7.9% Al Jazeera Services Oman OMR 1.8 -1.2% – – 0.4 -43.0% Source: Company data, DFM, ADX, MSM, TASI, BHB. (# Values in ‘000) Overall Activity Buy %* Sell %* Net (QR) Qatari Individuals 56.05% 50.95% 12,500,316.37 Qatari Institutions 17.40% 21.99% (11,261,537.67) Qatari 73.45% 72.94% 1,238,778.70 GCC Individuals 0.86% 1.57% (1,755,838.54) GCC Institutions 5.37% 2.70% 6,552,841.24 GCC 6.23% 4.27% 4,797,002.70 Non-Qatari Individuals 13.15% 13.28% (326,165.62) Non-Qatari Institutions 7.18% 9.50% (5,709,615.78) Non-Qatari 20.33% 22.78% (6,035,781.40)
  3. 3. Page 3 of 8 Earnings Releases Company Market Currency Revenue (mn) 1Q2019 % Change YoY Operating Profit (mn) 1Q2019 % Change YoY Net Profit (mn) 1Q2019 % Change YoY Muscat Finance# Oman OMR 3,442.0 0.7% 1,386.0 -17.7% 370.0 -60.1% The Financial Corporation Oman OMR 0.9 36.9% – – 0.6 71.9% Source: Company data, DFM, ADX, MSM, TASI, BHB. (# Values in ‘000) Earnings Calendar Tickers Company Name Date of reporting 1Q2019 results No. of days remaining Status IHGS Islamic Holding Group 15-Apr-19 0 Due QNCD Qatar National Cement Company 16-Apr-19 1 Due MARK Masraf Al Rayan 17-Apr-19 2 Due QIBK Qatar Islamic Bank 17-Apr-19 2 Due CBQK The Commercial Bank 17-Apr-19 2 Due ABQK Ahli Bank 18-Apr-19 3 Due NLCS Alijarah Holding 18-Apr-19 3 Due QIIK Qatar International Islamic Bank 21-Apr-19 6 Due QISI Qatar Islamic Insurance Company 21-Apr-19 6 Due GWCS Gulf Warehousing Company 21-Apr-19 6 Due QGTS Qatar Gas Transport Company Limited (Nakilat) 21-Apr-19 6 Due DBIS Dlala Brokerage & Investment Holding Company 23-Apr-19 8 Due QFBQ Qatar First Bank 23-Apr-19 8 Due QIGD Qatari Investors Group 23-Apr-19 8 Due QIMD Qatar Industrial Manufacturing Company 24-Apr-19 9 Due UDCD United Development Company 24-Apr-19 9 Due QCFS Qatar Cinema & Film Distribution Company 25-Apr-19 10 Due QAMC Qatar Aluminum Manufacturing Company 28-Apr-19 13 Due QNNS Qatar Navigation (Milaha) 28-Apr-19 13 Due IGRD Investment Holding Group 28-Apr-19 13 Due QFLS Qatar Fuel Company 28-Apr-19 13 Due MERS Al Meera Consumer Goods Company 28-Apr-19 13 Due ZHCD Zad Holding Company 29-Apr-19 14 Due QGRI Qatar General Insurance & Reinsurance Company 29-Apr-19 14 Due AKHI Al Khaleej Takaful Insurance Company 29-Apr-19 14 Due MCCS Mannai Corporation 29-Apr-19 14 Due QOIS Qatar Oman Investment Company 29-Apr-19 14 Due DOHI Doha Insurance Group 29-Apr-19 14 Due ORDS Ooredoo 29-Apr-19 14 Due KCBK Al Khalij Commercial Bank 29-Apr-19 14 Due VFQS Vodafone Qatar 30-Apr-19 15 Due QGMD Qatari German Company for Medical Devices 30-Apr-19 15 Due DHBK Doha Bank 30-Apr-19 15 Due Source: QSE
  4. 4. Page 4 of 8 Stock Split Dates for Listed Qatari Companies Source: QSE News Qatar  QSE announced stock split days for listed Qatari companies – Please refer to the table above (QSE)  QEWS reports weak 1Q2019 results; Maintain Accumulate with QR204 price target – QEWS' net profit declines 22% YoY and 19% QoQ in 1Q2019 to QR309mn in 1Q2019, missing our estimate of QR362mn (variation of 15%). Overall performance was weak driven by seasonality and impact of lower tariff structures at key plants with QEWS’ top-line declining 18% YoY and 8% QoQ to QR539mn, 10% below our forecast of QR598mn. The company attributed the decline to seasonality along with tariff impact from RAF B, RAF B1 and RAF B2. This is evident in gross margin of 50.6% in 1Q2019, which dropped from 59.6% in 1Q2018 but improved slightly from 50.2% in 4Q2018. We will provide more color on results and could adjust our full year estimates once we speak to management. We continue to like the company as a solid long-term play with a defensive business model. QEWS enjoys a solid long-term growth profile with attractive EBITDA margins and compelling dividend/FCF yields. LT catalysts (which we have not yet factored into our estimates) abound, including additional expansions domestically (like Facility E; the Siraj solar project, etc.). Beyond Paiton (Indonesia), we do not have color on other Nebras projects, which could lead to growth relative to our model. Given that seasonality alone implies an improvement in 2Q and 3Q performance, we would be buyers into any weakness. (Company financials, QNB FS Research)  GISS announces Gulf Helicopters acquires a 49% stake in Air Ocean Maroc – Gulf International Services (GISS) announced that Gulf Helicopters Company, a fully owned subsidiary of GISS, acquired a 49% stake for an amount of $1mn in Air Ocean Maroc, a Moroccan company specialized in aviation and medical evacuation in Morocco. Gulf Helicopters’ CEO, Mohamed Ibrahim Al Mohannadi said, "This 49% acquisition of Air Ocean Maroc represents a new important milestone in our roadmap to expand our global presence and to serve the North- West Africa and Southern Europe." The acquisition comes in line with GISS' strategy to enter new and profitable international markets, such as North-West Africa and Southern Europe that have greater potential. This international expansion will undoubtedly support the company in its efforts to increase sources of income and utilize its assets more efficiently, while establishing itself as a leading global aviation service provider. Gulf Helicopters will continue to explore further opportunities and areas to strengthen its global footprint by engaging in effective partnerships with key players in various promising markets. Air Ocean Maroc currently holds an Air Operator Certificate for the Fixed Wing and is also in the process of obtaining an Air Operator Certificate for Helicopters. (QSE)
  5. 5. Page 5 of 8  BRES to disclose 1Q2019 financial statements on April 29 – Barwa Real Estate Company (BRES) announced its intent to disclose 1Q2019 financial statements for the period ended March 31, 2019, on April 29, 2019. (QSE)  WDAM to disclose 1Q2019 financial statements on April 22 – Widam Food Company (WDAM) announced its intent to disclose 1Q2019 financial statements for the period ended March 31, 2019, on April 22, 2019. (QSE)  SIIS to disclose 1Q2019 financial statements on April 29 – Salam International Investment Limited (SIIS) announced its intent to disclose 1Q2019 financial statements for the period ended March 31, 2019, on April 29, 2019. (QSE)  ZHCD to disclose 1Q2019 financial statements on April 29 – Zad Holding Company (ZHCD) announced its intent to disclose its 1Q2019 financial statements for the period ended March 31, 2019, on April 29, 2019. (QSE)  DBIS to disclose 1Q2019 financial statements on April 23 – Dlala Brokerage & Investment Holding Company (DBIS) announced its intent to disclose 1Q2019 financial statements for the period ended March 31, 2019, on April 23, 2019. (QSE)  QAMC to disclose 1Q2019 financial statements on April 28 – Qatar Aluminium Manufacturing Company (QAMC) announced its intent to disclose 1Q2019 financial statements for the period ended March 31, 2019, on April 28, 2019. (QSE)  MRDS postpones its AGM and EGM to April 16 – Mazaya Qatar Real Estate Development (MRDS) announced that its Ordinary General Meeting (AGM) and Extra Ordinary General Assembly Meeting (EGM) has been postponed, after the number of shareholders in attendance did not reach the quorum on April 14, 2019. The next meeting will be held on April 16, 2019. (QSE)  Qatar’s hospitality sector records strong growth; hotel occupancy rate up 7% YoY – Collective efforts in boosting Qatar’s hospitality and tourism industry have witnessed positive results. Despite the ongoing blockade for more than 21 months, the occupancy of hotels across all categories witnessed solid YoY growth in February 2019. The average occupancy of hotels (all categories put together) jumped to 67% in February 2019 registering 7 percentage points improvement in YoY growth against 60% recorded in the corresponding month last year, official data showed. The average revenue per available room has increased by QR10 to QR246 in February 2019 from QR236 in February 2018. This remarkable improvement in the performance of the hotel industry can be attributed to increase in the number of tourists. In February 2019 some 376,106 people visited Qatar, which is about 8.2% more than the same month last year. When compared on monthly basis, the number of visitors saw a sharp jump of over 90% compared to 196,594 visitors in January 2019. (Peninsula Qatar)  Qatar Chamber lauds role of exhibitions sector in economic development – Qatar’s growing trade and exhibitions industry is playing a substantial role in the development of various sectors of the country, and is serving as a platform for the private sector to expand to other markets, according to Qatar Chamber’s Director General, Saleh bin Hamad Al Sharqi. The global exhibitions industry has helped promote local and international economic sectors, as well as spur foreign direct investment (FDI) inflow and tourism activities. “In Qatar, the exhibitions sector plays a substantial role in enhancing economic development, investments, and tourism, as well as it activates the hospitality sector and its related activities and helps in developing the industrial sector, which is the backbone of any developed economy,” Al Sharqi said in the latest issue of Al Moltaqa, Qatar Chamber’s monthly economic magazine. He added, “Qatar has successfully managed to prove its position as a regional and global hub for major fairs, exhibitions, and economic events, thanks to the provision of a well-developed infrastructure and mega centers set to host trade exhibitions of all types.” (Gulf-Time.com)  Qatargas’ COO: Cases of mishaps in Qatar’s energy industry much below than global average – Instances of mishaps in Qatar’s energy sector are much lower than the global average, Qatargas’ Health Safety Environment and Quality Chief Operating Officer (COO), Khalid Al Hemaidi said. Qatargas has been supplying LNG and other hydrocarbon products to the global market safely and reliably on a regular basis over the years. “We have maintained very high standard of safety as we care for and value both people and process safety above all else. This is a core value, a value which has been instrumental in our journey to becoming a premier LNG company in the world,” he said on the sidelines of 2019 Qatar Process Safety Symposium in Doha. He added, “Since the company was established in 1984, Qatargas has grown into the largest liquefied natural gas producer in the world. Today, Qatargas operates 14 LNG trains with a total annual production capacity of 77mn tons. None of this would be possible without an enduring commitment to process safety.” (Qatar Tribune)  JRE expands its UK portfolio by introducing two ultimate luxury properties – For Just Real Estate (JRE), the leading property service provider in Qatar, there’s no looking back in the already established and ever-expanding luxury projects portfolio in Qatar as well as overseas. Adding projects year- after-year and gaining muscle in every territory it is operation, JRE has fast gained the prime position of being the most sought- after real estate player from Qatar. JRE announced newer additions in its already flourishing UK portfolio by introducing Beaufort Park and Sovereign Court. (Zawya)  Qatar and Russia agree to enhance mutual investments – The Qatar-Russian Business Council has organized a meeting in Moscow to discuss strengthening cooperation relations between businessmen of both countries. The Qatari side was headed by Qatar Chamber’s board member, Ali Abdul Latif Al Misnad, and the Russian side by Ahmed Blancoev. The meeting witnessed signing of a MoU to strengthen their cooperation relations, Qatar Chamber stated. The Qatari delegation visited many official institutions and held meetings with representatives of the Russian Federation business community. The meeting touched on reviewing bilateral relations and ways of enhancing them, especially in trade and investment aspects. It also reviewed the investment climate in both countries and business opportunities available for both sides, Qatar Chamber stated. (Qatar Tribune) International  Deloitte: British businesses stash cash as Brexit gloom deepens – A growing number of large British-based businesses are prioritizing cash-flow, fearing a downturn, as their view of the long-term economic impact of Brexit has darkened to its most
  6. 6. Page 6 of 8 negative so far, accountancy firm Deloitte stated. Some 81% of Chief Financial Officers (CFO) surveyed expect Brexit to lead to a long-term deterioration in Britain’s business environment, the highest since the question was first asked at the time of June 2016’s referendum on leaving the European Union. This was up from 78% at the end of last year in the quarterly survey of 89 companies, including 15 in the FTSE 100 and 33 in the FTSE 250 share indices, plus smaller firms and subsidiaries of major foreign companies. Deloitte carried out the survey between March 26 and April 7, just after it became certain Britain would not leave on the long-planned date of March 29, and before British Prime Minister Theresa May secured a delay of up to six months. The Deloitte survey showed the proportion of CFOs expecting one or more interest rate rises in the next 12 months dropped to 40% from 58% at the end of 2018. Deloitte’s long- running gauge of corporate risk appetite remained close to lows last seen after 2016’s Brexit referendum and during the depths of the financial crisis, and more than half of firms said increasing cash-flow was a priority, the highest proportion in nine years. (Reuters)  OECD: Japan should rely on sales tax to generate extra revenue – Japan should rely primarily on raising the sales tax to generate extra revenue, and may need to raise this tax to as high as 26% to achieve a large primary surplus, Organisation for Economic Cooperation and Development (OECD) stated. The national sales tax is scheduled to rise to 10% in October, from 8% now. The Bank of Japan should remain focused on achieving its 2% inflation target, but there are signs its purchases of exchange- traded funds (ETFs) are distorting the stock market, OECD stated in an economic survey of Japan. (Reuters) Regional  Petrochemicals, industrials to weigh on 1Q2019 earnings – Weighed by petrochemicals and industrials, the aggregate earnings of GCC companies are projected to decline for 1Q2019. Qatari banks are expected to report flattish earnings growth as strong balance sheet performance gets offset by higher provisioning charges and lower non-interest income, according to SICO Research. On an aggregate level, the SICO forecasted that the earnings of petrochemicals to decline by 11% YoY, led by lower product prices. Average petrochemical product prices for a basket of major products declined 16% YoY, and 8% QoQ during the first quarter of this year. Feed stock prices declined as well as Naptha plunged 10% YoY and 7% QoQ. Spot prices for petrochemicals during March exhibited a downtrend YoY. The YoY contraction in commodity prices will drive the earnings of industrials sector lower. The core earnings of the real estate sector is expected to be weak YoY on weak mall rental/hospitality segment performance. The SICO analysts projected another muted quarter for consumers sector despite modest revenue growth of 5% YoY. Cost pressures are expected to affect earnings. (Peninsula Qatar)  Putin keeps options open on possible extension of OPEC+ oil cuts – President Vladimir Putin kept his options open on whether to extend Russia’s joint oil-production cuts with OPEC beyond June, saying that he wanted to continue cooperation with the group, but also highlighting the many uncertainties in the market. Russia is comfortable with current oil prices, he said. He also said that he does not support an uncontrollable increase in the cost of crude that could hurt his country’s other industries. “We’ll coordinate with OPEC and take a decision depending on the market situation,” at the next meeting in June, he added. (Gulf-Times.com)  Saudi Arabia seeks to boost alliance in Indonesia's energy industry – Saudi Arabia seeks to boost alliance with Indonesia by discussing partnership opportunities in energy, including in oil and petrochemical, according to a statement by Indonesian President’s office. President Joko Widodo met with Saudi Arabian King Salman Bin Abdulaziz and Crown Prince Mohammed Bin Salman. Joko Widodo and King Salman discussed the possibility of Saudi Aramco and Indonesia’s Pertamina partnering in Cilacap refinery, Indonesia’s Foreign Minister, Retno Marsudi said. Asset valuation issue will be resolved to allow partnership. Indonesia and Saudi Arabia have also agreed to set up a leaders’ consultation forum and to hold annual meeting. (Bloomberg)  SAMA Governor: Zakat calculations for banks will be between 12%-14% in 2018 – Zakat calculations for most of the banks as per 2018 financial results show that Zakat will be between 12%-14% of profit, Governor of Saudi Arabian Monetary Authority (SAMA), Ahmed Alkholifey said. He said that it is difficult to imagine any bank’s Zakat reaching 20% of profit in 2019. (Bloomberg)  Consolidation in UAE's insurance sector on cards – Mergers and acquisitions (M&As) will inevitably happen in the UAE's overcrowded insurance and Takaful industry however individuals holding larger stakes in the companies are willing to sell at a much higher price which is not attractive for the buyers, according to industry executives and analysts. "M&As are inevitable to happen in the UAE and the GCC. Usually, banks start - which has already happened in the GCC - and then the insurance sector follows. We have already seen some mergers and acquisitions taking place recently in Bahrain," Secretary-General, Emirates Insurance Association, Fareed Lutfi said. He disclosed that there are rumors that some M&As are in the pipeline. General Manager, Market Development for MENA, South and Central Asia, AM Best, Vasilis Katsipis said that there are several reasons that hamper local insurers and Takaful firms from consolidation. "Firstly, all the insurance companies, or majority of them, belong to individuals who have many other businesses. Insurance is only a small part of what they do. Therefore, it is not a high priority for them either in terms of liquidating assets or in terms of spending time. "Secondly, there are lot of businesses where owners want to sell them however their selling price is not meeting the buyers' requirements. That has been the case for several year. Since it is not a burning issue for majority shareholders, M&A doesn't materialize," he said. (Zawya)  Dubai economy still struggling to find its footing – Dubai’s $108bn economy is still eking out growth, however distress is increasingly felt far beyond its bellwether property industry. Despite the Emirate’s standing as a commercial hub, businesses are pulling up stakes and private schools are suffering from tepid growth in student numbers. Dubai’s GDP last year expanded at the weakest clip since 2010. Figures published on Dubai’s statistics centre website paint a picture of an economy
  7. 7. Page 7 of 8 still struggling to find its footing last year despite an improving outlook for crude. (Gulf-Times.com)  Dubai Islamic Bank looking at acquisitions among expansion plans – Dubai Islamic Bank, the UAE’s biggest Islamic lender, has stated that it regularly looks at expansion opportunities, including acquisitions. "Dubai Islamic Bank regularly looks at opportunities to support expansion of its activities, including acquiring other financial institutions," according to a statement. The statement followed Bloomberg reporting earlier this month that Dubai Islamic Bank is considering buying its smaller rival Noor Bank, according to sources. (Bloomberg)  Dubai's DAMAC gets $229mn loan to develop tower in London – DAMAC International has obtained $229mn loan to develop Damac Tower at Nine Elms, London, the developer has stated. Barclays, Burgan Bank, Emirates NBD have arranged the facility. The package has been matched by significant equity commitment from Damac. It has made private residential pre- sales of about 55% of Nine Elms project. It has also designed a 50-storey tower in partnership with Versace Home. (Bloomberg)  Abu Dhabi's pension fund joins KKR and BlackRock in ADNOC pipeline deal – Abu Dhabi National Oil Company (ADNOC) stated that Abu Dhabi Retirement Pensions and Benefits Fund (ADRPBF) has signed a deal to invest in a pipeline infrastructure entity that ADNOC is setting up with BlackRock and KKR. ADRPBF will invest $300mn and will acquire a 3% stake in the newly formed entity, ADNOC Oil Pipelines, with BlackRock and KKR together holding 40% and ADNOC the remaining 57%, ADNOC stated. In February, ADNOC sealed a $4bn midstream pipeline infrastructure deal with US investment firms KKR and BlackRock. (Zawya)  National Bank of Kuwait 1Q2019 net profit up 15.1%, beats forecasts – National Bank of Kuwait (NBK) reported a 15.1% rise in 1Q2019 profit, helped by higher net interest income and lower provisioning charges, beating analysts’ forecasts. The bank stated that the net profit totaled KD107.7mn during the January to March period, up from KD93.6mn a year earlier. EFG Hermes had made a net profit projection for NBK of KD100mn for the period, while SICO Bahrain had an estimate of KD96mn. Operating revenue came in at KD225.6mn as compared to KD213.4mn in 1Q2018. Operating profit came in at KD154.4mn as compared to KD148.9mn in 1Q2018. The bank stated that the increase in net interest income reflected strong growth in business volumes. Big Kuwaiti lenders such as NBK have benefited from increased spending on government-backed projects, supported by higher oil prices. Analysts expect corporate borrowing appetite will continue to improve in Kuwait amid higher oil prices. (Reuters)  Boubyan Bank’s 1Q2019 net income at KD14.6mn – Boubyan Bank reported 1Q2019 net income of KD14.6mn as compared to KD12.6mn in 1Q2018. Operating revenue came in at KD37.2mn in 1Q2019 as compared to KD34.2mn in 1Q2018. Operating profit came in at KD22.9mn in 1Q2019. Total assets for 1Q2019 stood at KD4.55bn. The bank stated that the rise in operating income is mainly due to increase in net investment income and growth in net fees and commissions income. (Bloomberg)  HBMO posts net profit of OMR8.1mn in 1Q2019 – HSBC Bank Oman (HBMO) recorded net profit of OMR8.1mn in 1Q2019 as compared to OMR8.1mn in 1Q2018, remaining flat YoY. Operating income rose 6.7% YoY to OMR22.2mn in 1Q2019. Total assets stood at OMR2.36bn at the end of March 31, 2019 as compared to OMR2.41bn at the end of March 31, 2018. Net loans and advances to customers stood at OMR1.3bn, while customers’ deposits stood at OMR1.9bn at the end of March 31, 2019. (MSM)  BKNZ posts 103% YoY rise in net profit to OMR2.1mn in 1Q2019 – Bank Nizwa (BKNZ) recorded net profit of OMR2.1mn in 1Q2019, an increase of 103% YoY. Operating profit before provision and tax rose 107% YoY to OMR3.8mn in 1Q2019. Operating income rose 35% YoY to OMR8.1mn in 1Q2019. Total assets stood at OMR895.3mn at the end of March 31, 2019 as compared to OMR775.5mn at the end of March 31, 2018. Financing to customers stood at OMR742.9mn, while customers’ deposits stood at OMR710.9mn at the end of March 31, 2019. (MSM)  Bank of America recommends Bahrain's 2029 bonds on oil, reforms – Spread on Bahrain government’s 2029 Dollar bonds is expected to decline to 300bps over US treasuries as compared to 330bps now, as market conditions in the near-term should support high yield issues, particularly oil names, Bank of America Merrill Lynch (BofAML) stated in a research report. Bahrain benefits from oil, reform momentum and explicit GCC support, unlike past years. Bahrain’s Sukuk have underperformed Eurobonds, however BofAML prefers Eurobonds given generally higher Emerging Market Bond Index (EMBI) inclusion demand from investors, 10 year maturities benefit from both local and external demand. Risks to the bonds are lower because of oil, emerging markets weakness and treasury rally. Technicals for Bahrain are also among the strongest in emerging markets and have potential to squeeze bonds tighter than fundamentals might imply; locals have been forced to move from lower-yielding GCC sovereigns into higher- yield bonds such as Bahrain, which still has a zero percent risk weighting. (Bloomberg)
  8. 8. Contacts Saugata Sarkar, CFA, CAIA Shahan Keushgerian Zaid al-Nafoosi, CMT, CFTe Head of Research Senior Research Analyst Senior Research Analyst Tel: (+974) 4476 6534 Tel: (+974) 4476 6509 Tel: (+974) 4476 6535 saugata.sarkar@qnbfs.com.qa shahan.keushgerian@qnbfs.com.qa zaid.alnafoosi@qnbfs.com.qa Mehmet Aksoy, PhD QNB Financial Services Co. W.L.L. Senior Research Analyst Contact Center: (+974) 4476 6666 Tel: (+974) 4476 6589 PO Box 24025 mehmet.aksoy@qnbfs.com.qa Doha, Qatar Disclaimer and Copyright Notice: This publication has been prepared by QNB Financial Services Co. W.L.L. (“QNB FS”) a wholly-owned subsidiary of Qatar National Bank (Q.P.S.C.). QNB FS is regulated by the Qatar Financial Markets Authority and the Qatar Exchange. Qatar National Bank (Q.P.S.C.) is regulated by the Qatar Central Bank. This publication expresses the views and opinions of QNB FS at a given time only. It is not an offer, promotion or recommendation to buy or sell securities or other investments, nor is it intended to constitute legal, tax, accounting, or financial advice. QNB FS accepts no liability whatsoever for any direct or indirect losses arising from use of this report. Any investment decision should depend on the individual circumstances of the investor and be based on specifically engaged investment advice. We therefore strongly advise potential investors to seek independent professional advice before making any investment decision. Although the information in this report has been obtained from sources that QNB FS believes to be reliable, we have not independently verified such information and it may not be accurate or complete. QNB FS does not make any representations or warranties as to the accuracy and completeness of the information it may contain, and declines any liability in that respect. For reports dealing with Technical Analysis, expressed opinions and/or recommendations may be different or contrary to the opinions/recommendations of QNB FS Fundamental Research as a result of depending solely on the historical technical data (price and volume). QNB FS reserves the right to amend the views and opinions expressed in this publication at any time. It may also express viewpoints or make investment decisions that differ significantly from, or even contradict, the views and opinions included in this report. This report may not be reproduced in whole or in part without permission from QNB FS. COPYRIGHT: No part of this document may be reproduced without the explicit written permission of QNB FS. Page 8 of 8 Rebased Performance Daily Index Performance Source: Bloomberg Source: Bloomberg Source: Bloomberg Source: Bloomberg (*$ adjusted returns) 45.0 70.0 95.0 120.0 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 QSE Index S&P Pan Arab S&P GCC (0.4%) (0.2%) 0.7% 0.5% 0.2% 2.4% (0.1%)(1.0%) 0.0% 1.0% 2.0% 3.0% SaudiArabia Qatar Kuwait Bahrain Oman AbuDhabi Dubai Asset/Currency Performance Close ($) 1D% WTD% YTD% Global Indices Performance Close 1D%* WTD%* YTD%* Gold/Ounce 1,290.35 (0.2) (0.1) 0.6 MSCI World Index 2,159.39 0.5 0.4 14.6 Silver/Ounce 14.97 0.0 (0.9) (3.4) DJ Industrial 26,412.30 1.0 (0.0) 13.2 Crude Oil (Brent)/Barrel (FM Future) 71.55 1.0 1.7 33.0 S&P 500 2,907.41 0.7 0.5 16.0 Crude Oil (WTI)/Barrel (FM Future) 63.89 0.5 1.3 40.7 NASDAQ 100 7,984.16 0.5 0.6 20.3 Natural Gas (Henry Hub)/MMBtu 2.75 0.4 5.4 (13.7) STOXX 600 387.53 0.5 0.6 13.2 LPG Propane (Arab Gulf)/Ton 66.00 (1.5) 6.9 3.9 DAX 11,999.93 0.9 0.7 12.2 LPG Butane (Arab Gulf)/Ton 66.87 (3.4) 11.0 (4.5) FTSE 100 7,437.06 0.4 0.4 13.5 Euro 1.13 0.4 0.7 (1.5) CAC 40 5,502.70 0.7 1.2 14.8 Yen 112.02 0.3 0.3 2.1 Nikkei 21,870.56 0.3 0.0 7.7 GBP 1.31 0.1 0.3 2.5 MSCI EM 1,089.09 0.1 0.4 12.8 CHF 1.00 0.1 (0.2) (2.1) SHANGHAI SE Composite 3,188.63 0.2 (1.6) 31.2 AUD 0.72 0.7 1.0 1.8 HANG SENG 29,909.76 0.2 (0.0) 15.6 USD Index 96.97 (0.2) (0.4) 0.8 BSE SENSEX 38,767.11 0.1 (0.3) 8.2 RUB 64.35 (0.4) (1.5) (7.7) Bovespa 92,875.00 (3.1) (5.2) 5.0 BRL 0.26 (0.6) (0.2) 0.0 RTS 1,253.44 0.7 2.3 17.3 101.8 95.3 82.2

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