TresVista Financial Services MENA Newsletter

1. Issue No. 1.51
MENA WEEKLY NEWS
Week of July 17, 2009 – July 23, 2009
MENA MARKETS
For additional Saudi Arabia Kuwait UAE Egypt Oman Jordan Commodity (USD) Currency (USD/)
information or requests 5,670.5 7,675.0 1,751.8 556.8 5,808.1 2,584.5
Gold Spot 949.15 GBP 0.607
(1.8%) 1.2% 0.8% 4.0% 4.9% (0.6%)
or to be added to the Silver Spot 13.73 EUR 0.707
distribution list, please Morocco Bahrain Qatar Tunisia Lebanon Abu Dhabi LME 3 mth. Cu 5,530.00 SAR 3.750
contact 11,072.2 1,494.6 6,438.3 3,621.4 1,430.5 2,711.2 LME 3 mth. Al 1,785.00 KWD 0.287
0.2% (0.1%) 0.8% 0.6% (0.2%) 1.3% ICE Brent Crude 69.25
MACRO ECONOMIC NEWS
Samir Tiwari Saudi Arabia
VP – Sales & Marketing
▼ About 1,400 investors are demanding SAR 351.0 million from the Ministry of Trade and Industry in compensation for losses
+912261567304
incurred by a real estate investment scheme in Makkah.
stiwari@tresvista.com
Kuwait
1. Macro Economic ▲ Kuwaiti money supply growth accelerated to 21.5% in June 2009 from 17.7% in May 2009. Money supply, measured as M2,
News rose to KWD 25.2 billion on June 30, 2009, from KWD 20.7 billion on June 30, 2008.
2. Government ▲ Kuwait’s central bank reduced its three repurchase rates by 25 basis points each to spur the economy and lending, but left its
Regulations benchmark discount rate. The central bank has cut its overnight repo rate to 0.75%, and reduced its one week repo rate to
3. Sector News 1.75%, while its one month rate is now at 2.25%.
4. Company News - Japan's trade deficit with Kuwait narrowed 60.0% in June 2009 to USD 491.6 million from June 2008. According to the
5. Mergers & Finance Minister, the nation's trade deficit with the entire Middle East also fell 62.8% to USD 4.9 billion. Exports to Kuwait
Acquisitions reduced by 69.8% y – o – y to USD 52.0 million in June 2009 for the steepest decline in 2009 and imports from Kuwait also
6. Liquidity / Capital plunged 61.2% to USD 543.6 million.
Raising
UAE
Market Buzz… ▲ The UAE markets look promising for H2 2009 as their price – to – earnings ratios are among the lowest among Gulf bourses
while they have built up a positive momentum in index growth. As of Thursday's close, the P/E ratios of Dubai Financial
Market (DFM) and the Abu Dhabi Securities Exchange (ADX) stand at 8.26x and 7.75x respectively.
▲ The Government of Dubai has unveiled a Financial Support Fund, designed to manage and distribute USD 20.0 billion worth
of state funds to government owned entities. The support fund is aimed at government and government – linked companies
and institutions and not at private companies.
…A Bahraini proposal ▲ According to a survey by Booz & Company, a surprising 55.0% of consumers in the UAE have maintained consistent spending
to forge a consensus levels since the downturn began. A further 37.0% have reduced spending and the rest are spending more.
among Gulf states on
alternatives to the ▼ Exports from Dubai declined by 16.0% to Dh 90.3 billion in H1 2009 compared to H1 2008. June recorded the highest monthly
controversial export volume valued at Dh 17.0 billion while February accounted for the lowest monthly billing of Dh 14.4 billion, indicating a
sponsorship system and gradual upswing in the export activity.
for imposing a residence ▼ Drop in the UAE population this year will ally with waning consumer demand and lower rents and food prices to depress the
cap on foreigners has country's inflation to its lowest level of about 1.0% in nearly 15 years. The rate has already plummeted from a record 12.3% in
been endorsed by the six 2008 to just below 5.0% in the first four months of 2009.
GCC countries. A ▼ Heavy capital outflow by banks allied with a surge in imports and lower investment income to plunge the UAE's balance of
committee of GCC payment (BoP) into a record deficit in 2008 after several years of large surpluses. After leaping by nearly eight times in 2007,
labor undersecretaries the BoP's surplus plunged into a record deficit of Dh 172.4 billion in 2008.
will be formed to carry
out studies that will help - Abu Dhabi's gross domestic product (GDP) was Dh 688.3 billion in 2008, of which the industrial sector represents 65.5%,
the member states adopt construction activities represent 11.4% while commercial and financial activities make up the remaining share.
similar policies…
Jordan
▲ According to a study by Bayt.com, the global economic downturn has forced 28.0% of Jordanians to cut down on their
household expenditures. The study found that 31.0% of respondents have moved to a different country as a result of the
recession, while 5.0% have moved to a less expensive part of the country.
▲ The Central Bank of Jordan (CBJ) will issue a JOD 50.0 million worth of treasury bills for a term of six months
▲ A report issued by the CBJ showed that the kingdom's net foreign reserves rose to a record USD 9.2 billion at end of June 2009
against USD 6.6 billion by the end of June 2008. Net foreign reserves stood at a high USD 9.5 billion as of July 15 2009,
against USD 6.8 billion as of July 15 2008.
▲ According to Jordan Chamber of Industry, around 90.0% of the industrial sector in the Kingdom is encountering difficulties
in borrowing due to strict bank lending policies. A CBJ report issued in June 2009 showed that total credit facilities extended
by licensed banks in Jordan during the first five months of 2009 increased by 10.3% to reach JOD 13.0 billion, rising from JOD
11.9 billion recorded during the same period of 2008. Credit facilities to the industrial sector measured JOD 1.0 billion in the
first five months of 2009, dropping from JOD 1.6 billion at the end of 2008.
- According to the CBJ, seven products accounted for two thirds of Jordanian exports during the first four months of 2009.
Exports of textiles, vegetables, phosphate, pharmaceuticals, potash, fertilizers and transport heavy machines represented
66.0% of total exports, compared to 65.4% for the first four years of 2008.
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Page 1

2. Issue No. 1.51
MENA WEEKLY NEWS
Week of July 17, 2009 – July 23, 2009
Bahrain
▲ Annual inflation in Bahrain slowed to 2.7% in June 2009, its lowest level in 23 months, from 3.5% in May 2009. The
…Total foreign assets consumer price index of the kingdom stood at 109.4 points at the end of June 2009, compared with 106.5 points in June 2008.
held by GCC central
banks and sovereign GOVERNMENT REGULATIONS
wealth funds shrank by UAE
8.3% during the H1
▲ All institutions registered under the Labour Ministry will, from September 2009, start making payment of their workers'
2009 to just over USD
salaries through the newly introduced Wages Protection System (WPS). The move is aimed at boosting transparency and
1.1 trillion by the end of
stability in the labour market. It also seeks to protect the rights of workers in the country.
June 2009. These
combined foreign assets
Bahrain
stood at around USD
1.2 trillion at the end of ▲ The Central Bank of Bahrain (CBB) has issued new rules to strengthen insurance market regulations in Bahrain where
December 2008. The representatives of insurance companies will need a minimum qualification to practice in Bahrain.
UAE accounts for the
second – largest amount SECTOR NEWS
of these overseas assets, Saudi Arabia
with around USD 350.0 ▲ Saudi Arabia's banks performed well in Q2 2009 compared with Q1 2009 although their collective net income was lower than
billion… in Q2 2008. The Gulf Kingdom's banks boosted net earnings by about 2.9% to SAR 6.5 billion (Dh 6.4 billion) in Q2 2009
from SAR 6.3 billion in Q1 2009.
▲ Saudi's cement companies have asked authorities to lift a year long ban on exports that has blocked income from other markets
and saturated the local market.
…According to
Economist Intelligence ▼ The travel and tourism industry is facing a crisis of sorts. Airlines and travel industry experts have reported a significant drop
Unit, economies of the in the number of Saudi families taking vacation trips to Europe, the United States, Malaysia, Dubai, Egypt and Beirut. The drop
Middle East and North is due to two major factors – swine flu and the global economic meltdown.
Africa (MENA) region
are set to consistently Kuwait
outperform every other ▲ Kuwait's Directorate General of Civil Aviation reported an increase in passenger activity by 10.0%, commercial flights by
region in the world for 34.0%, and air cargo by 8.0% in June 2009. Non – commercial flights decreased by 17.0% during June 2009, as the total
the next five years. The number of passengers recorded was 718,000 in comparison to 656,000 in June 2008. The total number of passengers that
MENA region is the departed from Kuwait International Airport reached 404,000 in June 2009, in comparison to 370,000 passengers in June 2008.
only one in the world ▼ Following its review of Kuwaiti banks, Standard & Poor’s Ratings Services has lowered its long – term counterparty credit
that will register a rating on Gulf Bank to ‘BBB+’ from ‘A-’ and affirmed the ‘A – 2’ short – term rating. At the same time, S&P affirmed the
positive real GDP ‘A-/A-2’ ratings on Kuwait Finance House (KFH) and Commercial Bank of Kuwait (CBK) and the ‘BBB+/A-2’ ratings on Al
growth rate this year Ahli Bank of Kuwait (ABK) and Burgan Bank.
although the 0.9% GDP
growth forecast is a ▼ According to the Chinese Government, Kuwait’s crude oil exports to China edged down 2.1% in June 2009 from June 2008
fraction of the 5.9% the to 525,000.0 tons, equivalent to around 128,000.0 barrels per day (bpd). Kuwait provided 3.2% of China’s total crude oil
region witnessed in imports, compared with 3.7% in June 2008 and 6.0% in May 2009.
2008. Going forward,
UAE
however, regional
economies are reckoned ▲ Bank loans in the UAE increased 0.5% in June 2009 from May 2009, while deposits slid 1.1%. Bank credit, excluding
to witness sharp GDP provisions for bad loans, increased to Dh 1.0 trillion (USD 275.0 billion), after rising 0.6% the month before. The loan – to –
growth with 4.3% in deposit gap for the nation’s banks increased by 50.0% last month as lenders converted many of their government deposits into
2010, going up to 4.9% capital while also making more loans.
in 2012… ▲ The UAE is carrying out projects in construction and other sectors with a total value of nearly USD 930.0 billion (Dh 3.4
trillion) – some 45.0% of all projects planned in the Gulf. The combined value of projects planned or being carried out in the
GCC totaled around USD 2.1 trillion (Dh 7.7 trillion) at the end of Q2 2009, more than four times the estimated value of
projects in June 2005, an annual growth of nearly 50.0%.
…According to
▼ Ajman's largest residential property project will go ahead at just a fraction of its original size, after the developer cancelled
Independent Finance, a
more than 180 towers in response to a downturn in investor demand. Marmooka City, the largest planned community along
specialist financial
Emirates Road in Ajman, has been scaled back from 206 towers to just 20 buildings.
services company,
35.0% is a manageable ▼ The average official selling price (OSP) of Abu Dhabi crude oil grades fell 51.1% on year to USD 52.95 (Dh 194.00) a barrel
recovery rate when it in H1 2009 on global oil price trends. In H1 2008, the average selling price of Abu Dhabi crude grades was USD 108.32 a barrel.
comes to mortgage
defaults and 50.0% COMPANY NEWS
should be considered an Saudi Arabia
excellent recovery rate. ▲ Saudi Arabia's Rabigh Refining and Petrochemical Co. better known as Petro Rabigh, it shipped the first gasoline cargo
There is increasing from its new USD 10.3 billion complex at Rabigh. The 320,000 – barrel shipment was sent to Jizan province to meet domestic
speculation about the demand for the product.
kind of losses banks ▲ Reuters reported that Saudi Aramco and US ConocoPhillips are planning to award contracts to build a joint venture refinery
may have to suffer in in Saudi Arabia in May 2010. Aramco and Conoco invited contractors to bid for the construction of the 400,000 barrels per day
the country due to bad (bpd) Yanbu refinery last month and set January 31, 2010 as a deadline to submit proposals.
debts in the property
market…
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3. Issue No. 1.51
MENA WEEKLY NEWS
Week of July 17, 2009 – July 23, 2009
Kuwait
…Governments have a ▲ For H1 2009, Zain Group recorded impressive consolidated revenues of KWD 1.2 billion (USD 4.0 billion), an increase of
direct role in more than 24.1% compared to H1 2008. The company’s consolidated EBITDA increased by 46.3% to reach KWD 512.2 million (USD
60.0% of the USD 2.1 1.8 billion). Consolidated net income reached KWD 154.5 million (USD 533.5 million), an increase of 4.4% on H1 2008. The
trillion (Dh 7.7 trillion) earnings per share for the six month period were USD 0.14.
of major projects
currently taking place in ▲ An auction to sell KIA’s 19.8% stake in Kuwait's Boubyan Bank saw the National Bank of Kuwait (NBK) and Securities
the GCC, making them Group Co. win the bid. The auction saw 231.000 million shares of Boubyan sold in three tranches, each of 77.000 million
less prone to risks of shares. Two of the three tranches, or 154.000 million shares, went to NBK – the country's biggest lender by assets – for a price
cancellations or of KWD 0.55 per share, or a total price of KWD 84.7 million. The third tranche of 77.000 million shares was won by
suspensions. Across the Securities group Co. for a price of KWD 0.56 a share of a total value of KWD 43.1 million. NBK currently has a 13.9% stake
GCC USD 833.0 billion in Bank Boubyan.
or 39.0% of all active
projects are being UAE
developed by the private ▲ The proposed Emirates Development Bank, which is expected to be operational by 2010, will assist in providing funding for the
sector, while USD 822.0 40,000 houses to be built for UAE nationals. The bank, proposed by the UAE Government as a merger of Emirates Industrial
billion or 39.0% are Bank and Real Estate Bank with an authorized capital of Dh 10.0 billion, intends to partner with local funds providers within
being sponsored by the each emirate to achieve its objectives.
public sector… - Emirates Telecommunications Corporation (Etisalat) said it has not made an offer to buy Kuwaiti mobile telecoms firm Zain
or its African assets. The head of Etisalat’s international unit had earlier said that it was interested in buying a 51.0% stake in
Zain Group, given the right values.
…Gold production in Bahrain
the Middle East will
▼ Esterad Investment Company announced earnings of BHD 139,749.0 for Q2 2009 as compared to BHD 4,062,116.0 for Q2
more than triple in 2009
2008.
from 2006, according to
an estimate by the US - Telecommunications Regulatory Authority (TRA) proposes to set the Cost of Capital Applicable to the Regulated
Geological Survey Telecommunications Activities of Batelco and Zain at 9.0%.
(USGS). The region
produced 7.8 tons of Qatar
gold in 2006 and ▲ Vodafone Qatar was listed on Qatar Exchange earlier in the week, the first company to find its way on the local bourse after its
expects to enhance this new incarnation. To be known in brief as VFQS, once listed, 100.0% of the company’s authorised listed share capital is to
figure to 22.0 tons in also open for foreign capital, with no limits on foreign ownership.
2009. Gold production ▲ Doha Bank has posted net profits of QAR 646.0 million for H1 2009 showing an increase of 12.0% over H1 2008.
is then expected to
marginally increase to ▲ Commercialbank has sold loans and advances and other exposures to the government amounting to QAR 3.0 billion as part of
25.0 tons in 2011… the Government of Qatar’s initiative to support liquidity, encourage banks’ lending capacity and maintain the health of the
banking sector.
- Qatar Holdings, which manages strategic and direct investments by the State of Qatar, is talking to banks about a USD 6.0
billion – USD 7.0 billion loan linked to its possible investment in Porsche.
…Foreign assets held LIQUIDITY
by GCC central banks - Abu Dhabi Commercial Bank has bought back and re – issued about Dh 1.0 billion worth of bonds that were to mature in
and sovereign wealth November 2009. The Abu Dhabi – based lender issued Dh 2.1 billion of bonds in 2007 with a maturity of two years and a
funds contracted by coupon rate of 52 basis points above the Emirates Inter – bank Offer rate, or Eibor.
8.3% in the first six
months of 2009 to reach - Saudi Arabia's Acwa Power has completed financing for the USD 2.5 billion Rabigh independent power project (IPP) and
only USD 1.1 trillion, made the first drawdown of the facility.
from USD 1.2 trillion at - Al Salam Bank – Bahrain will increase its capital by a maximum of 250.00 million shares allocated to the bank through a
the end of 2008… maximum of 1:2 share swap in exchange for the bank's total capital (500.000 shares).
- Egypt's Raya Holding for Technology and Communications will buy back 2.700 million treasury shares.
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4. Issue No. 1.51
MENA WEEKLY NEWS
Week of July 17, 2009 – July 23, 2009
About Us:
Headquartered in Mumbai, India, TresVista Financial Services Pvt. Ltd provides research, analytics, advisory, investor relations, and other customized services for asset
managers, private equity funds, investment banks, operating companies, and other institutions. This document is provided for assistance only and must not alone be taken
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investigation as it deems necessary to arrive at an independent evaluation of an investment in the securities of companies referred to in this document (including the merits
and risks involved), and should consult his own advisors to determine the merits and risks of such investment.
This newsletter is provided for information purposes only. The information is believed to be reliable and is based on publicly available information, but TresVista does not
warrant its completeness or accuracy. Opinions, estimates, and assumptions constitute our judgment as of the date hereof and are subject to change without notice. Past
performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Additional
information is available upon request. © 2009 TresVista Financial Services.
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