Page 1

Kuwait Financial Centre “Markaz” RESEARCH

MENA Market Intelligence

December 2011

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.

Markaz Research is available on Bloomberg Type “MRKZ” <Go>

M.R. Raghu CFA, FRM Head of Research +965 2224 8280 rmandagolathur@markaz.com Layla Al Ammar Assistant Manager Tel: (965) 2224 8281 lammar@markaz.com

Humoud Salah N AL Sabah Assistant Analyst +965 2224 8530 halsabah@markaz.com

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)

Close

Saudi (TASI)

329

Turkey ISE National 100

WTD

MTD

YTD

2010

6,384

1.72%

3.48%

-3.41%

5.85%

159

51,949

2.38%

-3.45%

-21.55%

29.43%

Kuwait Gen. Index

107

5,794

-0.32%

-0.70%

-15.80%

-2.86%

Qatar(QE Index)

97

8,780

0.41%

1.36%

1.76%

22.76%

Abu Dhabi (ADI)

71

2,351

-1.76%

-3.84%

-13.12%

0.45%

Morocco (CAI)

61

11,122

0.16%

2.15%

-12.65%

22.15%

Dubai (DFMGI)

47

1,339

-2.56%

-2.89%

-17.91%

-6.03%

MSCI EGYPT

50

772

-4.89%

-11.69%

-45.53%

8.64%

Jordan (Amman)

23

4,556

-0.13%

0.46%

-13.81%

-4.19%

Bahrain (BAX)

17

1,134

-2.19%

-2.06%

-19.66%

-2.35%

Oman(Muscat SM)

14

5,636

-0.64%

2.92%

-16.55%

9.96%

Lebanon (Blom)

13

1,187

-0.25%

0.77%

-18.86%

-4.56%

Indicators

Last

MENA Markets

Source: The Daily Morning Brief “Markaz”


RESEARCH December 2011

What Analysts are recommending Company Orascom Construction Ind Orascom Construction Ind AGTHIA

Currency

Recommendation

Date of recommendation

Market price on recom day

Target

House

EGP

Buy

22-Dec

202

287

Rasmala

EGP

Buy

21-Dec

202

290

EFG Hermes

AED

Buy

22-Dec

1.7

2.2

NBK Capital

Equity Recommendation-Key points Company Orascom Construction (Egypt)

House Rasmala

Recommendation Buy

Orascom Construction (Egypt)

EFG

Buy

AGTHIA (United Arab Emirates)

NBK Capital

Buy

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

Title

Market

View

Qatar to List $12 Billion in Bonds on Exchange

Qatar

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

UAE

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

Bahrain

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

UAE

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%

U.A.E

Malaysia, Emirates Plan Sukuk To Fund Aircraft

UAE

EU Banks’ Retreat Creates Gap for Gulf Borrowers-

GCC

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

Capital Markets

Infrastructure

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

Dubai Jordan

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)


Disclaimer This report has been prepared and issued by Kuwait Financial Centre S.A.K (Markaz), which is regulated by the Central Bank of Kuwait. The report is owned by Markaz and is privileged and proprietary and is subject to copyrights. Sale of any copies of this report is strictly prohibited. This report cannot be quoted without the prior written consent of Markaz. Any user after obtaining Markaz permission to use this report must clearly mention the source as “Markaz “. The report is intended to be circulated for general information only and should not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy in any jurisdiction. The information and statistical data herein have been obtained from sources we believe to be reliable but no representation or warranty, expressed or implied, is made that such information and data is accurate or complete, and therefore should not be relied upon as such. Opinions, estimates and projections in this report constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinion of Markaz and are subject to change without notice. Markaz has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate, or if research on the subject company is withdrawn. This report may not consider the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. Investors are urged to seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed or recommended in this report and to understand that statements regarding future prospects may not be realized. Investors should note that income from such securities, if any, may fluctuate and that each security‟s price or value may rise or fall. Investors should be able and willing to accept a total or partial loss of their investment. Accordingly, investors may receive back less than originally invested. Past performance is not necessarily indicative of future performance. Kuwait Financial Centre S.A.K (Markaz) does and seeks to do business, including investment banking deals, with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. This report may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the report refers to website material of Markaz, Markaz has not reviewed the linked site and takes no responsibility for the content contained therein. Such address or hyperlink (including addresses or hyperlinks to Markaz‟s own website material) is provided solely for your convenience and information and the content of the linked site does not in any way form part of this document. Accessing such website or following such link through this report or Markaz‟s website shall be at your own risk. For further information, please contact „Markaz‟ at P.O. Box 23444, Safat 13095, Kuwait; Email: research@markaz.com ; Tel: 00965 1804800; Fax: 00965 22450647.

MENA Market Intelligence 26122011  

MENA Market Intelligence 26122011