Kuwait Financial Centre “Markaz” RESEARCH
MENA Market Intelligence
Week ending 22nd of December
Research Highlights: Provide readers with weekly updates on analyst recommendations from different investment houses collate views on the state of MENA economy, sector developments and fixed income news.
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M.R. Raghu CFA, FRM Head of Research +965 2224 8280 firstname.lastname@example.org Layla Al Ammar Assistant Manager Tel: (965) 2224 8281 email@example.com
Humoud Salah N AL Sabah Assistant Analyst +965 2224 8530 firstname.lastname@example.org
Kuwait Financial Centre S.A.K. “Markaz” P.O. Box 23444, Safat 13095, Kuwait Tel: +965 2224 8000 Fax: +965 2242 5828 markaz.com
Market Performance: Continuing political instability sent MSCI EGYPT down almost 5%. Dubai followed by shedding 2.56% WTD. On the other side of the spectrum Turkey lead the gainers, up 2.38% followed by KSA which was up 1.72%. With one more week till the end of the year MENA market performance for 2011 was weak; the only YTD gainer was Qatar which is up 1.76% while the biggest loser, Egypt, has shed 45.5% YTD Equity Research: Sparse equity research reports during this week as we near the end of the year, all of which were “Buy” calls. Fixed Income Development: Lending from European banks has slowed down, which could increase difficulties for GCC corporates to refinance $90bn maturing debt instruments through 2013, however on a positive note, Prince Fasial bin Abdulla announced a possible $7.5bn Islamic bond issue to finance Jeddah airport while Malaysian Airline System and AirAsia X. are joining Emirates in planning a $3.8bn issue.
Table 1: Market Performance M. Cap (USD Bn)
Turkey ISE National 100
Kuwait Gen. Index
Abu Dhabi (ADI)
Source: The Daily Morning Brief “Markaz”
RESEARCH December 2011
What Analysts are recommending Company Orascom Construction Ind Orascom Construction Ind AGTHIA
Date of recommendation
Market price on recom day
Equity Recommendation-Key points Company Orascom Construction (Egypt)
Orascom Construction (Egypt)
AGTHIA (United Arab Emirates)
Rationale Current political situation lead to price depression, however, internal value creation mechanism is intact along with increase in backlog in 4Q11. Hence, Rasmala issued a “Buy” recommendation with a price target of EGP 287 EFG Hermes issued a “Buy” recommendation with a price target of EGP 290. The main rationale behind this decision was due to the planned demerger of OCI, which should increase the value of consolidated fertilizer business. In its initiation report NBK Capital issued a “Buy” recommendation with a price target of AED 1.7 the main reasons behind this recommendation includes; 1) NBKC expects a decline in commodity prices which will boost AGTHIA‟s margins 2) Young population and high purchasing power will boost demand 3) introduction of high margin products should reduce margin volatility in the long run
RESEARCH December 2011
Fixed Income News Sources which include Bloomberg, Zawya, and daily newspapers were utilized in the creation of the fixed income section which is mainly from Markaz GCC daily report
Qatar to List $12 Billion in Bonds on Exchange
Qatar plans to list about $12 billion of central bankissued bonds on the country‟s bourse at an “appropriate time,” Al Arab newspaper reported, citing Shashank Srivastava, acting chief executive officer of the Qatar Financial Center Authority.
Abu Dhabi Islamic Bank repays $800m sukuk in full
Abu Dhabi Islamic Bank (Adib) has announced it has paid in full an $800m five- year sukuk, which matured on December 12. Adib, the second-biggest Islamic bank in the UAE, which last month sold a $500m fiveyear Islamic bond, issued the maturing sukuk in 2006 as part of a $5bn trust certificate programme.
Saudi aviation authority to issue sukuk to help finance new airport
Prince Fahd bin Abdullah, president of Saudi Arabia's General Authority for Civil Aviation (GACA) has said the regulator plans to issue an Islamic bond within one or two months to help finance its new SR27bn ($7.2bn) airport in Jeddah, Reuters has reported. "We have agreed with the finance ministry to issue a sukuk which will be paid back by revenue from the Civil Aviation Authority, and it will be issued soon... I believe within a month or two," he said
Aldar Won’t Delist Shares From Abu Dhabi, Deputy CEO Says
Aldar Properties won‟t delist its shares from the Abu Dhabi stock market, Deputy CEO Mohammed Khalifa Al Mubarak said. The shares trimmed losses. “Absolutely not,” he said. “We have no plans to delist.” Aldar shares have tumbled to a record low amid investor speculation the developer may be taken private. The company last week converted bonds valued at AED2.1bn ($572mn) held by Mubadala Development Co. into shares of AED1.75 each. That was at the bottom end of the agreed range of AED2.30 to AED1.75.
RESEARCH December 2011
NASDAQ Dubai Sukuk safekeeping soars 36%
Malaysia, Emirates Plan Sukuk To Fund Aircraft
EU Banks’ Retreat Creates Gap for Gulf Borrowers-
The FTSE NASDAQ Dubai UAE 20 Index closed at 1371.07 today, down 1.22%, from the previous close. While trading turnover remains tiny at the NASDAQ Dubai, the Middle East's only international capital market has posted a success in the Islamic bonds or sukuk segment. "The value of sukuk investments held for safekeeping in NASDAQ Dubai's custody has risen by 36% in the past year, from $100m to $136m," a NASDAQ Dubai spokesperson said earlier in the day. NASDAQ Dubai is the largest exchange for sukuk in the Middle East by listed value, with 15 Sukuk with a nominal value of $10.5bn. Malaysian Airline System and AirAsia X. are joining Emirates in planning sales of Islamic bonds as banks curb lending on Europe‟s debt crisis. Malaysian Air, voted Asia‟s leading carrier by World Travel Awards this year, may sell sukuk to partly fund an order for MYR12bn ($3.8bn) of aircraft due to be delivered by the end of 2014, CEO Ahmad Jauhari Yahya said. AirAsia X, the region‟s first long-haul budget service, may issue Shariah-compliant debt to expand its fleet, CEO Azran Osman Rani said. The airlines are turning to Islamic markets on prospects European lenders will reduce credit next year due to the region‟s financial crisis, according to S&P. Syndicated loans in Europe, the Middle East and Africa fell 29% to $193.8bn this quarter from the previous three months, while global sales of sukuk rose 38% to $7.2bn. Gulf companies may struggle to refinance almost $90bn of borrowings maturing through 2013 as the sovereign-debt crisis forces European banks to retreat, leaving a gap that local lenders may be unable to fill. Syndicated lending in the MENA has fallen to the lowest since 2004. Banks arranged $26bn in loans this year, less than half the $60bn raised in 2010 and less than a quarter of the 2007 peak of $109.2bn. European banks arranged about 42% of loans compared with about 39% in 2010. Half of the top 10 mandated banks this year are lenders based in the Arab world, such as National Bank of Egypt, up from three in 2010 and 2009. France‟s Credit Agricole and BNP Paribas have dropped out of the top 10.
Markaz Research Offerings Economics MENA Unrest (Apr-11) Kuwait Development Plan (Mar-11) Kuwait Investment Sector (Sept-10) The New Regulations on Kuwait Investment Sector (Jun-10) Kuwait Capital Market Law (Mar-10) The “Vicious Square” Monetary Policy options for Kuwait (Feb-08) To Leap or To Lag: Choices before GCC Regulators (Apr-07) GCC for Fundamentalists (Dec-06) GCC Leverage Risk (Nov-06)
Sectors GCC GCC GCC GCC GCC GCC
Power (2011) Airports (2011) Ports (2011) Water (2011) Roads & Railways (2011) ICT (2011)
MENA Real Estate MENA Market Outlook Kuwait Qatar Syria
KSA Egypt Algeria
Abu Dhabi Lebanon
Periodic Research Real Estate Strategic Research MENA Real Estate Perspectives Weekly Real Estate Market Commentary International Real Estate Market Outlook U.S.A. Banking
Stress Testing Kuwait Banks (May-11) GCC Banks - Done with Provisions? (Jan-10) Shelter in a Storm (Mar-09) Banking Sweet spots (Apr-08) Oil & Gas Diworsification: The GCC Oil Stranglehold (Jan-09) Monthly Regional Petroleum Projects Commentary Daily Oil & Gas Bulletin
Strategic Research KSE 15 Index (Sept-11) How is the GCC preparing for a AA+ World? (Sept-11) GCC Outlook 2H11 (Aug-11) What to expect in 2011 (Jan-11) The Golden Portfolio (Sept-10) Persistence in Performance (Jun-10) What to expect in 2010 (Jan-10) What is left for 2009? (Sept-09) Missing the Rally (Jun-09) This Too Shall Pass (Jan-09) Fishing in Troubled Waters (Dec-08) Down and Out: Saudi Stock Outlook (Oct-08) Mr. GCC Market-Manic Depressive (Sept-08) Global Investment Themes (June-08) To Yield or Not To Yield (May-08) China and India: Too Much Too Fast (Oct-07) A Potential USD 140b Industry: Review of Asset Management Industry in Kuwait (Sep-07) A Gulf Emerging Portfolio: And Why Not? (Jun-07) Derivatives Market in GCC (Mar-07) Managing GCC Volatility (Feb-07) Periodic Research Annual GCC Market Outlook Quarterly Thought Speaks GCC Equity Funds GCC Corporate Earnings GCC Equity Research Statistics Monthly Market Review Weekly MENA Market Intelligence KSE Market Review International Market Update Daily Markaz Daily Morning Brief Markaz Kuwait Watch Daily Fixed Income Update Company Research (See the list attached)
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